SAVING for retirement, like training for a marathon, takes discipline and a plan. Reuters
The Comrades Marathon held each June and known as the Ultimate Human Race, sees runners embarking on a gruelling 89km between the cities of Durban and Pietermaritzburg.

“Investors can learn from marathon runners when preparing for the ‘ultimate human race’ - that is, retiring financially independent,” says Belinda Carbutt, group savings specialist at Allan Gray and avid runner.

Borrowing from a marathon runner’s training guidelines, Carbutt gives investors top tips on how to retire financially independent.

1. Get a training programme. Training programmes guide runners on how to reach their race goals. For a successful retirement plan, the starting point is to create and stick to a monthly budget.

“Keep a ‘running’ total of everything you spend monthly, from debit orders to coffees. A budget will help you to determine where you’re spending too much on items you don’t need, and prioritise important items, like saving for retirement,” she says.

2. Stick to a healthy diet. A good diet ensures that marathon runners’ bodies are correctly fuelled.

Carbutt says that just as there are good and bad calories in food, the same is true for financial debt.

“Good debt may help you create value or generate long-term income, such as a bond to buy a house. Bad debt encompasses items that quickly lose their value.

"A clear understanding of your needs versus wants will help you follow a healthy financial diet.”

3. Pace yourself. Carbutt says marathon runners understand that running at their own consistent pace gets them to the finish line, but they may need to make adjustments along the way to achieve their goal.

Saving is similar. “Your age and level of contributions determine the pace at which you’ll need to save.”

It’s widely held that a retirement income equal to 75 percent of your final salary will allow you to live at the same standard of living during retirement. This figure accounts for the adjustments many people make as they age - for example, no further retirement savings contributions, but higher medical costs.

Allan Gray research indicates that saving 16 percent of your salary is a reasonable starting point if you are 25 years old, but this increases as you age.

“You need to save 21 percent if you start saving at 30, up to 39 percent if you start at 40, and 56 percent if you start at 45. These numbers, while averages, assume a consistent, inflationary salary increase each year, an inflation rate of 6 percent, that you retire at 65 and earn an average return of consumer price inflation plus 5 percent.”

4. Cross training. Carbutt says this helps runners build strength. Similarly, there are different products that can be used to complement your retirement planning.

“Saving through your employer’s pension or provident fund may not be enough. Consider using a tax-free investment or a retirement annuity to supplement your occupational retirement fund.” She suggests speaking to a financial adviser.

5. Don’t procrastinate. “Fear to start training can cause runners to procrastinate,” says Carbutt. “As an investor, guard against this inertia.”

She says if you started training for the “ultimate human race” at age 25 by saving R1000 a month, you would have R5 550 348 by age 65 (assuming 10 percent annual return), with 91.4 percent of the final sum from compound interest. You would only have paid R480 000 over four decades to reach the total amount.

“For Comrades runners who don’t make it there’s always next year, if you start training early enough. For retirement, the earlier you start, the better your chances of reaching your goal,” says Carbutt. 

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