Six steps to reaching 6% status.
To be part of the 6% of South Africans able to retire comfortably, you need to actively plan for a better retirement. Apart from starting as early as possible, Jac de Wet, National Head of Sales at PSG Wealth says there are six steps you can follow to maximise your retirement savings, giving you a better chance of ending up on the right side of the statistics.
Cutting back on expenses by making small adjustments to your standard of living could allow you to add more to your retirement each month. “Increase your retirement annuity by R1 000 per month by means of a debit order to make it easier,” de Wet says. “An extra R1 000 into your retirement annuity will go a long way over time.”
Use your age as a guide to growth assets
Allocating a higher percentage to growth assets (like equities) is a great long-term strategy, but how do you know how much exposure you should have? “A rough rule of thumb is taking 100 as the age to which you will live and deducting your current age from it. The result is the percentage of exposure you should have to equities,” de Wet says. “So, at age 40, you should have 60% in equities; at age 60, you should have 40% in equities, and so on.” This method helps to manage risk as you can’t really afford a 20% market crash at the age of 70, but at age 45 you have time to recover more easily.
Consult a professional financial planner or wealth adviser
You don’t want to make any uninformed decisions on such an important part of your financial planning. “An adviser helps to take the emotion out of investing, which can be tough in volatile markets, and can help keep you on track towards your saving goals, following a financial plan tailored to your unique circumstances,” de Wet adds.