A lot of attention is paid to the importance of saving those Rands for retirement, and rightly so. Planning is obviously a vital element of financial success, but what you do with your money when you retire needs just as much attention. If you’re some years away from retirement, you need to have a proper understanding of your future resources to help you to make any adjustments necessary. Remember, when you retire your money has a finite life span, so you need to manage it with precision.
In order to maintain your lifestyle, you need to review your retirement plan sooner rather than later. By doing this you’ll be able to spot any potential potholes that may be hiding somewhere along the road. Sit down with a financial advisor and find out whether or not you are on track to achieving your retirement goals. If not, you have the time and the opportunity to fix it. Here are some things to consider when reviewing your retirement plan.
1 Your budget becomes more important than ever
The chances are you won’t retire with a higher monthly income than when they were working, so review your spending habits! Don’t wait until you retire to make adjustments – changing the way you spend now will give you a greater sense of control over the steps you need to take to get things on track. Identify areas where you can cut spending and redirect to savings.
2 Take a systematic approach to finding savings
Before you retire, find ways to add as much money as possible into your existing funds. If necessary, postpone your retirement for as possible to delay the date you start taking your pension income. This will increase your income because your savings will have longer to build up and your pension will be payable for a shorter period.
3 Review the performance of your savings and investments
Consult a financial planner to do a revision of your existing pension plan and investments. They’ll be able to ensure that your investments are fully optimised and that you are using your tax concessions efficiently.
4 Don’t be too conservative
According to experts, when retiring many people make the mistake of switching to more conservative interest bearing investments that do not beat inflation. You need to make sure that your investments continue to outperform inflation and give you a real rate of return. Remember that there is no room for error once you’ve retired, so take all the advice you can get beforehand!
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