What is the Shape of Your Retirement Plan?

Most South Africans do not plan adequately for retirement. The upcoming Retirement Expo, sponsored by Efficient Group aims to show how retirement can be a time to look forward to, provided you start or boost your retirement strategy and savings now.

This is according to retirement experts set to participate in the expo from 25 – 27 October at the Coca-Cola dome in Johannesburg.

The expo is aimed at everyone over 45, says Lynn Chamier, General Manager of event organiser Thebe Exhibitions & Projects. She says 45 is the perfect age to be thinking seriously about retirement plans. “15% of South Africans don’t plan on ever retiring, while another 15% plan to retire but don’t save for it and 41% believe they’ll have to work after the age of 65.”

Planning for financial freedom

Dawie Roodt, Chief Economist of the Efficient Group  notes that increasing life expectancy means that people entering the workplace now could reasonably expect to be retired for almost as many years as they worked, assuming they retire at age 60. With birth rates falling in developed countries, and states under pressure to support pensioners, the real responsibility for providing for a comfortable income on retirement will rest with the individual, he says. “Currently, the state pension in South Africa is around $155 per month on average. In the US, it is around $670 and in Australia, it is $1560. Another factor is that the South African official pensionable age is 60, compared with around 65 in wealthier nations, while the cost of state provided pensions in South Africa is just over 1% of GDP.” 93% of South Africa’s population above the age of 60 receives a social pension.

To sustain the living standards they are accustomed to after retirement, people should look to a financial portfolio that meets their appetite for risk, and is regularly adapted in line with changing market conditions, says Roodt. “Most people saving for retirement are well educated, aged 35 to 49 and in LSM 10,” he says. “But overall, the saving rate per household in South Africa is zero. This is an improvement over a few years ago, when South Africans actually lived on their savings, or did not save at all. .”

Roodt points out that simply taking out a retirement annuity is not necessarily the way to optimise returns on savings. “When deciding on an investment, it is important that you understand it fully. A good investment is not simply about getting the best return – it is a matter of finding the best ratio between return and risk that suits the investor. In the current environment, borrowing to invest in your business – not for consumption – could provide the best returns.” Another misconception is that paying off debt is always a good way to secure future income. However, Roodt commented that: “the cost of servicing a mortgage is quite low currently, while there are good returns on the JSE at the moment. Sometimes it makes better sense not to pay off debt, but to invest instead, or at least, have a balanced approach towards the right kind of debt and savings.”

Careful financial planning is important at all ages, but is particularly important for the so-called ‘sandwich generation’ says Thebe Exhibitions & Projects. This generation – generally adults in the 40-plus age group, is burdened with providing support for both their children and their ageing parents. This double burden makes saving even more challenging.

Roodt believes that it is crucial for every household to have a financial plan. “You need a plan that encompasses everything from education, holidays and household budget to retirement. With the help of a good financial advisor, you can ensure that your portfolio remains relevant to the current market conditions, and proactively aims to ensure financial stability after retirement,” he says.

Making ‘second half of life’ dreams a reality

Lynda Smith: ‘Wisdom Preserver and Connection Specialist’, and CEO of Refirement Network – a business helping organisations and Baby Boomers to understand the opportunities and challenges for this particular demographic group, believes that passing retirement age presents an opportunity for people to live with passion and purpose, and even a pay-cheque.

Smith, a workshop speaker at the Retirement Expo cites many cases where people have retired from their ‘first half of life’ jobs, and used the skills they have acquired to embark on a ‘second half of life’ career path that fulfils lifelong dreams. The ‘second half of life’ path might entail the opening of a small business, consulting in a niche area, or even volunteer work. “Many who have done this say it is the best move they ever made,” she says.

Smith notes that modern life affords people many other options to traditional retirement. “These options can provide financial reward, intellectual stimulation, flexibility and freedom, emotional fulfilment and overall wellbeing during your mature years,” she says. Smith believes remaining occupied and involved is hugely beneficial for people who have passed retirement age. This is not only because many will need to supplement their pensions, but also because there is a basic human need to feel needed. Smith says there are a number of ways people can ease out of the stress of 9 to 5 work, and still supplement their income. These include job sharing, phased retirement, contract work, working from a virtual office, beginning a second career or stipend work.

Answering the tough retirement questions

With the face of retirement changing rapidly, the Retirement Expo 2013 from 25-27 October 2013 at the Coca-Cola dome in Johannesburg aims to deliver expert advice and options for the retirement years.

With the theme ‘Live.Plan.Play!’ the expo will feature several exhibits to boost your retirement planning and lifestyle for the future. The expo will include health and financial services; travel destinations and lifestyle options; health products; home and DIY solutions; fitness and positive ageing products; retirement and holiday properties; as well as security and care products and services.

The three Workshop Areas will include interactive workshops, presented by experts in their fields. Visitors will discover the trends and options on retirement planning, choosing the right retirement village, managing your health and wellbeing, amongst others.

Visitors will also be able to enjoy interactive demonstration areas and relaxation points including the Builders Express and Builders Warehouse Activity area; the Evergreen Lifestyle Lounge; the Guard your Life – Healthy Living Pavilion, a Good Health Juice Bar, the Standard Bank – Pause Point Area, Live Auctions by Sandton Auctioneers, and even a chance to try your hand or show off your skills at bowls/curling!

Diarise 25-27 October at the Coca-Cola dome, from 9am to 5pm on Friday & Saturday and 9am to 3pm on Sunday. Tickets are just R50 per person or R25 for seniors, at the door, and pensioners who park in Parking Block D get discounted parking for just R15.

For the full activity schedule go to www.retirementexpo.co.za

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