By Nico Strydom
One often hears it being said: you are never too old to start saving. But at what age should you start saving to ensure that you make enough provision for your old-age?
According to experts, the reality is that most South-Africans don’t retire comfortably and this results in people having to lower their standards or even having to work longer before they can retire.
Research by Nedbank indicates that only one out of 10 South Africans who retire can maintain their living standard, while six out of 10 people have not made sufficient provision for their retirement.
The reason for this is that people are not empowered to know how much they should save to be able to retire comfortably. People also find it difficult to save due to the high cost of living and people who change their employment often let the money they saved (for example pension) be paid out to settle other commitments.
You need approximately 35 years to save enough money for retirement. This means you have to start saving by at least 30 years of age if you want to retire at 65.
People who start saving for their retirement at a young age, are encouraged to follow a moderate to aggressive risk investment approach and systematically change it as they grow older.
It is true that if you start saving for your retirement earlier, the amount you have to set aside each month will become all the more affordable. If you start putting away money earlier, you will reap the benefits.
It is difficult to determine how much you should save. In South Africa the unofficial rule is that you should be able to replace about 75% of your income to retire comfortably. In this scenario, however, it is accepted that you no longer have a home-loan or other large debts.
Most important therefore is to start saving for your retirement as early as possible, try to save more than is necessary, never let your savings be paid out, pay off debt and to get professional advice.
There are different savings options available for retirement and each has its pros and cons. These include, among others, a pension fund provided by your employer, a provident fund with which you can receive pay-outs when you retire, a retirement annuity you take out yourself and additional investments.
Standard Bank: https://www.standardbank.co.za/southafrica/personal/learn/6-tips-for-saving-enough-for-retirement