Having an open approach to retirement savings can benefit your financial future

To make the preferred choice about your retirement income, you’ll need to be strong in your resolve to not waste money. Picture: Freepik

To make the preferred choice about your retirement income, you’ll need to be strong in your resolve to not waste money. Picture: Freepik

Published Mar 22, 2024


Gone are the days of silently trying to keep up with the Joneses.

‘Loud budgeting’ is taking centre stage highlighting that the truth about finances should be shared openly. This is particularly true when it comes to the money you save towards your golden years.

Loud budgeting started as a light-hearted joke, turned into a trend to watch on TikTok and is now going global. This new mindset helps to ensure we stop living beyond our means, and are totally honest about it.

While this does not mean limiting our aspirations, it does link to the realities many of us face. In South Africa especially, with low economic growth and a relentlessly rising cost of living, having enough money to get by and to put towards your future, requires a delicate balance.

It is important to be honest with yourself, your friends and your loved ones about your financial means, to make sure you have enough money for your future.

Saving money for retirement may require some sacrifices

Whether you’re relying on your employer to help you save towards your golden years, or doing it yourself through a retirement annuity or tax-free savings account, the reality is that time is needed for wealth to compound.

This will help you accumulate enough funds to purchase a sufficient income for your retirement.

Declaring ‘loud budgeting’ to your family, friends and colleagues represents your ambition to making ends meet.

Instead of overspending, you are proudly prioritising crucial financial factors like your retirement contribution, which is a healthy alternative to being unable to afford to save, going into debt or having to live more frugally because you have run out of money.

While there are many temptations to part with your hard-earned cash, it’s better to be in control to help you save enough money for down the line. To complement this, a written plan is a good way to approach retirement with confidence.

What to consider about your golden years

Regrettably, many people avoid dedicating time to financial self-care.

While spoiling family members or travelling are common, addressing crucial questions like whether you want to leave money behind for your family, or how much of your pre-retirement income you will be able to replace when you retire, should be considered as early as possible.

With the help of a financial adviser, you can address these and other questions, and carefully consider which post-retirement products will work for you depending on how much you have saved.

Many retirees find themselves hesitant to risk ‘losing’ their hard-earned capital in the event of their passing — a risk associated with life annuities, even though we are living longer and these pay an income for life or give you capital protection for an appropriate term.

As a result, many retirees opt for a living annuity instead and quietly end up drawing down too much of their capital in order to sustain their pre-retirement lifestyle, which often results in running out of money too soon.

A better option might be a blended annuity, which encompasses both life and living annuity features within a single product, empowering you to tailor a well-balanced combination over time.

A financial adviser can assist you in selecting the most suitable annuity product for your individual circumstances to optimise your retirement income, but this is reliant on how you have managed your budget before you get there.

Get to your golden years on your terms

To make the preferred choice about your retirement income, you’ll need to be strong in your resolve to not waste money now and remember that silence is not golden.

Be proud about your goal to save, embrace loud budgeting for the sake of your future finances, and reap the rewards when your golden years arrive.

* Heather Bell, Business Development Manager, Just SA.

** The views expressed here are not necessarily those of IOL or of the title sites.

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