The status of Nelson Mandela as one of the greatest South Africans ever can never be in dispute. His words and deeds are used as inspiration by all to do great things and to persevere where giving up seems to be the logical choice to make.
We rarely apply his wisdom to our retirement planning process, even though his life lessons can provide direction to the average fund member in their quest to secure the best possible retirement outcomes. If I could have asked Madiba what the five things are that he would advise me to do when I plan and prepare for retirement, he would have, in my opinion, named the following:
1. See the Big Picture
Nelson Mandela took decisions and actions based on the future outcomes that he wanted to achieve. The Freedom Charter provided the ‘’big picture’’ of the South Africa that he wanted to create and that he was willing to die for. All decisions were therefore based on putting the building blocks in place to secure the desired outcome.
By the same token, you must first determine your retirement goals before constructing a retirement plan. You should know what you would like your life to look like after you retire before you start to put the building blocks in place, for example, deciding on how much and how to save for retirement, the best investment strategy and the best way to take advantage of the available tax incentives. It is difficult to draw a roadmap for a successful retirement journey if you have no idea of where the retirement destination is and what you want it to look like. Construct your own “big picture” and own it before you build it.
2. Be Courageous
Madiba took decisions with the courage in the knowledge that he would have to live with the consequences, good or bad. He did not hesitate to take risk where it was required to achieve the goals that he set to achieve.
You should have the courage to take the right decisions with regards to your retirement planning. This will include decisions about the most suitable investment options given your circumstances, goals and preferences. Fund default investment options play an important role, but they are not designed around your specific needs, goals and preferences as they need to cater for a large class of people based on age or period until retirement. Only you can determine the investment strategy that is right for you.
3. Be Disciplined
Nelson Mandela developed the discipline to make informed decisions and not to react based on emotions. When faced with challenges and adversity, he would apply self-discipline before reacting to these external factors.
When it comes to retirement planning, you should also follow a disciplined approach. Discipline should be applied to the portion of your salary that you commit to contributing to your retirement fund, to deciding on and keeping to your investment decisions based on factual information and not on emotional reactions to financial market changes and to preserving your retirement savings when you change jobs and not to use it for purposes other than creating an income stream after retirement.
4. Honour your commitments
When Nelson Mandela negotiated a new future for South Africa at the Convention for a Democratic South Africa (Codesa), he knew that any non-violent transition in South Africa would be based on him honouring the commitments that he made and ensuring that others around the negotiation table trusted that he had the integrity to do so.
In retirement planning, the commitments that you make to your plan must never be broken. Your best retirement outcome is based on your commitment to contribute as much as possible to your fund, to invest the funds in a prudent manner to achieve the highest risk adjusted investment returns and to protect your retirement savings until your date of retirement by not withdrawing any funds before retirement. Being a person of integrity starts with you being true to yourself and your retirement plan.
5. Educate yourself
Nelson Mandela famously stated that education is the most powerful weapon which you can use to change the world. Education is the key to liberation.
Educating yourself about your retirement fund, the source of much of your future wealth if you are a paid employee, is a requirement for any successful retirement plan. Without it, you will be at the mercy of others to provide you with retirement information and advice that might put their own interests above yours. You have the primary responsibility to ensure that you acquire the weapon called knowledge to use in the fight for your ideal retirement outcome.
*Ladouce is a pension funds lawyer and the author of Pensions for Palookas
** See Editors Note for related book review and Mandela Day giveaway
PERSONAL FINANCE