Strengthen your financial future by following these tips

For too many South Africans, retirement is not something to be celebrated but rather a stressful event looming in the not-too-distant future. This is because of the following two factors, according to James Fraser, the chief operating officer at PPS Investments:

– Only 6% of South Africans retire with enough savings to maintain the lifestyle they’ve become accustomed to while working, and
– 49% of South Africans do not have a concrete retirement plan!

So, what can soon-to-be South African retirees do about these concerning statistics (besides still working after retirement age)? Well, check out our top 7 tips on growing your retirement savings and choose the best options for you!

  1. Calculate how much you’ll need
  2. Maximise your retirement contributions
  3. Fight inflation
  4. Diversify your investments
  5. Review and consolidate your portfolio
  6. Keep investing after retirement
  7. Seek professional help

Calculate how much you’ll need

Working out how much you need to retire comfortably and cover expenses can be tough, but having a plan in place is so worth it to help keep you on track. Consider what you’ll have to spend money on monthly in retirement, and be realistic about the costs! Too many retirees budget too little for medical expenses, so think about everything, including medical aid and other medical costs, insurance, holidays, emergencies, etc. And remember, if you fail to plan, you plan to fail!

Maximise your retirement contributions

Take advantage of tax-efficient retirement savings options, such as contributing to a retirement annuity (RA) or an employer-sponsored pension fund. By maximising your contributions within the allowable limits, you can benefit from tax deductions and potentially grow your savings faster.

Fight inflation

It’s an unfortunate truth that inflation remains high across the world. During periods of high inflation, the common suggestion is to consider certain asset classes like inflation-linked bonds and cash, which can protect against inflation and benefit from increasing short-term rates. You could also explore investment options that offer diversification, such as multi-managed funds.

This fund combines different asset classes, managers, and funds to create a well-diversified portfolio aligned with specific investment objectives and time horizons. By diversifying sensibly, the fund’s performance can be less affected by market forces like inflation, as different components of the fund can perform well in various market cycles.

Diversify your investments

Continuing along the same thought pattern, spreading your retirement savings across diverse investment options is almost always a wise idea. You could consider investment options like stocks, bonds, mutual funds, and property. Diversification helps mitigate risk and allows you to capture potential growth opportunities in different sectors of the economy.

Review and consolidate your portfolio

Regularly reviewing your investment portfolio ensures it aligns with your retirement goals and risk tolerance. As you approach retirement, consider gradually shifting your investments towards more conservative options to protect your capital.

Many people also have their retirement savings scattered across different providers or invested in products not specifically designed for retirement. To get a clear picture of your total retirement savings, it is a good idea to consolidate these savings from your various providers. Consolidating investments with one provider may also lead to reduced administrative fees. By consolidating and gaining a comprehensive view of your retirement savings, you can better plan your financial future.

P.S. Chat with your financial advisor to estimate future values and determine the additional monthly savings needed to achieve your retirement goals within the remaining time.

Keep investing after retirement

Don’t let anyone tell you or allow you to think you’re too old to invest after you’ve retired! There is no need to stop investing in your retirement savings. Retirement vehicles like living annuities provide an opportunity for continued savings growth while also offering a regular retirement income stream. It’s important to note that investing in these vehicles carries a degree of risk, and you should be comfortable with market fluctuations as you will assume the associated investment risk.

Seek professional help

Consulting with qualified professionals provides invaluable guidance tailored to your specific retirement needs. mCubed Group is your trusted independent fund administrator, and we can help you create a personalised retirement plan, assess your investment options, and navigate complex financial decisions to optimise your savings growth.

If you need advice on the best ways to grow your savings and invest in a comfortable future retirement, mCubed Group is here to help. Members, clients, and participating employers of our retirement funds enjoy access to the best investment administration and advice, excellent service, and complete transparency for the best long-term results. Our fund-appointed FAIS-accredited financial advisors also help you to enjoy a safe, financially sound, stress-free, and prosperous retirement. Get in touch today to speak to a financial advisor you can trust!