What to do when you haven’t saved enough for retirement
Retirement is supposed to be a blissful time where you can kick back and enjoy the fruits of your life’s work. However, for many South Africans, retirement will look a lot different as only 6% of our country’s population have saved enough to retire comfortably – leaving the remaining 94% without enough money to support themselves in retirement. For those further from retirement, the situation looks a bit better – they still have a decades or more to prepare.
What about those who will end their working lives within the next 5 to 10 years?
At Cornerstone Investment Advisory Services, we believe in helping each client achieve their personal financial goals. If you are staring retirement in the face and you haven’t quite saved enough, read on to get a few tips that may help you to be more financially stable after you retire.
Try to prolong retirement
Although the standard age for retirement in South Africa is 65, medical and lifestyle advancements have made it possible for most people to easily work until 70 and even 75. If your company allows it, try to keep working for as long as you can. Even if you can’t be employed permanently, many companies use retired and highly experienced people as consultants on a contract basis. This still gives you the opportunity to earn an income after retirement.
In doing so, you will give your savings a couple of additional years compounding growth (and that can make a massive difference) you’. Further, you’ll delay drawing income from your retirement fund thereby putting less pressure on your savings. Ultimately, working a bit longer will help to make up for the lack of savings and help to ensure a more comfortable retirement.
Re-evaluate your investment strategy
This is a very important step – make sure your investments are aimed at giving you the highest growth at the appropriate level of risk, as per your investment mandate. There is no one size fits all approach to investments and a few years before retirement is when you need your money to work it’s hardest. Speak to your investment adviser or wealth planner to revise your investments if needed.
If you do not have an investment advisor or you haven’t seen yours in more than a year, it’s imperative that you contact us to ensure your retirement savings are managed and invested the right way. Click here to get in touch with us.
- Your home
Many retirees find themselves still living in a large family homes that they purchased when their children were young, and life looked a lot different. With the kids out of the house, you probably don’t need those extra rooms anymore and a large property may become a bottomless pit of maintenance costs. Consider moving to a smaller, more cost-effective and low maintenance home and reinvest any profit you make from the sale of your house. Not only can this decrease your monthly maintenance costs on your property, but you’ll be able to add a large chunk of savings to your retirement fund.
- Your car
Sell your large luxury vehicle if you have one and rather opt for a more practical and cost-effective car. Here your savings can be multifaceted: you could save on maintenance, monthly repayments, fuel usage and short-term insurance. Also, if you have multiple cars, consider selling the additional cars and keep only one for you to use daily. Once again, any additional funds from sales and other monthly savings can be used to boost your retirement fund.
- Your lifestyle
This is usually a sensitive area, because after 40 odd years of hard work, it’s only natural that many retirees feel that they are deserving of a certain lifestyle. Unfortunately, your lifestyle and your available funds are linked and if you haven’t saved enough, you’ll have to adjust your lifestyle accordingly. This will mean different things for different people but will most likely include fewer luxury purchases and a stricter budget. If budgeting isn’t your strong suit, Cornerstone Financial Planning can help, click here to learn more.
Explore the possibility of a second income stream
Whether it’s setting up a home-based business, freelance consulting or selling beauty products on the side, try and find a way to supplement your salary with a second income stream, ideally something you can continue to do after retirement. By securing a second income you will be able to increase your savings significantly before retirement as well as supplement your post-retirement income, thereby ensuring a more comfortable retirement.
Are you unsure if you have saved enough for retirement? Perhaps you simply need a second opinion on your current investments? Cornerstone Investment Advisory Services has more than a century of collective experience and will surely be able to assist you. Send an email to email@example.com or call us on 011 794 6611 to learn more.