This can be as simple as saving for when you’re older or investigating the options available for retirement living. Photo: File

DURBAN - There’s a lot to think about when planning for your retirement years but with living longer it’s preferable to think about your plans from as young as possible.

Evergreen Lifestyle Financial Director Adam Kajee shares his tips for successful retirement planning that you should discuss with your financial advisor.

1. Consider your options 

First, you must look at purchase models. In South Africa, the two main models found in retirement estates are investing in freehold or sectional title properties or purchasing a Life Right. Look at the affordability of the unit you’re looking to purchase, the levies involved, and whether there are care facilities in place (as well as the costs involved). 

2. Location is important

Perhaps you’ve always dreamed about moving to an island paradise in your retirement years but, when it comes to it, it’s likely that you’ll want to be close to your family and what you know: the familiarity of a regular coffee shop and seeing familiar faces in the street.

3. Think about all financial considerations

You must consider your ongoing living expenses when you retire. Many retirement estate residents worry that they will outlive their assets. Look at the levies you will need to pay, and the estimated increases. If you are opting for the Life Right model, you should also consider the shareholder credentials and whether they are well capitalised. 

4. Consider the scale of your retirement option

In smaller retirement estates, the levies tend to be higher. The bigger the estate, the lower your levies will be. Going forward Evergreen Lifestyle estates will be built on a larger scale, offering between 600 and 800 units, in order to combat high levies. This is important as ongoing levies are a serious factor for residents as they get older and might not have the means to pay rising fees.

5. How are you going to pay for it?

The sad reality is that given the demographics of our country the vast majority of people in South Africa are not saving for their retirement years. It’s important to put money aside throughout your working life to ensure you can live comfortably later on. 

6. Think about long-term value for money

You don’t know how long you’ll be around for after you retire so you want to be certain that you are set up for the long-term. If you’re looking for an investment, a Life Right certainly isn’t it. But from a financial perspective, it offers peace of mind as it is secure for the remainder of your life and your partner’s life. No transfer duty or VAT is payable on purchase. Levies are generally lower than your typical sectional title retirement village as the developer owns the property and is responsible for major structural maintenance. 

7. Look at international trends

New Zealand, Australia, the United States and Europe are all heavily Life Rights-based. In many countries, it is essentially the only model. Some countries might have a different name for it, but it all boils down to the same thing: you do not own a physical property, but instead purchase a home for the remainder of your life. It is a clear global trend, and South Africa seems to be heading the same way.

8. How much space do you really need?

People typically look to downsize a family home when it becomes a burden to maintain. From a financial perspective, this makes sense. There is also a knock-on effect to owning a larger property: the bigger the house, the higher the costs. 

9. You can still earn money after retirement

If you have a skill or hobby that you can turn into a small business, there’s no reason you shouldn’t be earning a second income to add to your retirement fund. Retirees are often highly skilled and experienced and could consider consulting or freelance work for income. 

10. Teach your children to save

Parents can teach their children valuable lessons early by encouraging them to save their pocket money for the things they want, instead of just letting them have what they want and their pocket money to spend on other things.

PERSONAL FINANCE