“Someday I’ll be eighteen goin’ on fifty-five, eighteen ‘til I die”
Bryan Adams
Tapping your 40-year-old feet to the rhythm of eternal youth is great until you realise that you do not have enough to retire on. What now?
A lot of us only realise late in life how important financial independence on retirement is. This is understandable. When we are younger, we believe in our endless potential. But the fact remains: we need to save at least 10% of our income from a young age towards our retirement. And the later we start the bigger the percentage. It is commonly believed that for every R1 million you have at retirement (age 65), you can earn R5000 per month.
What does that mean for you? You are past the halfway mark in your career and know that you have not made enough provision.
Good news, it is not too late. Let me show you how:
The key is to start NOW and not postpone any longer. I propose six relatively easy steps to maximise your committed savings.
1. Prioritise yourself.
We often contribute to funds for our children, parents and others. If you fail to plan ahead for yourself, you will become someone else’s responsibility.
Maximise your retirement contribution.
You can do this through your pension fund or starting your own new retirement plan. The advantage of a personal retirement plan is the flexibility and that you do not need to change it if you change employers.
Do proper tax planning.
Invest your tax returns wisely, either in your retirement plan or in a fixed investment that will show decent returns in 5 years.
Stagger your retirement income.
Contribute to a retirement plan to which you can invest longer and only get the benefits later – say from age 70 onwards.
Plan on earning a smaller or passive income after 60.
Life expectancy is higher than ever, and quality of life allows us to contribute longer to society.
Review your plan regularly.
If you commit to adequate plans for retirement, you can cheerfully sing along:
It’s my life
It’s now or never
I ain’t gonna live forever
I just want to live while I’m alive
It’s my life
(Bon Jovi)
Talk to me if you are interested in a quantitative approach to solve this problem in context of your unique situation. With access to the country’s largest private retirement fund administrator and all that backing to manage your expectation, I can make a difference.
Please explain what is a passive income.
I am turning 70 next birthday.
Margie, a passive income is an income for which you are not (really) working. If you are currently earning a pension income you could call it that. Other examples would be rental income ( if renting out properties is not your occupation), or dividends from investments.