Money Heroes
Money Heroes is an empowering series that gives you expert advice from our Momentum Dream Team to help you on your road to financial well-being. This season starts by discussing the importance of life insurance and its significance for you.
The road to retirement
Our seventh episode focuses on the decisions you need to make as you approach retirement age.
Johan Werth, Financial Adviser for Consult by Momentum, explains the difference between a life and a living annuity.
Martin Riekert, Chief Commercial Officer at Momentum Wealth, discusses the Momentum Wealth Income Illustrator tool and how it can help you plan for your future.
Lastly, Theo Vorster, CEO of Galileo, simplifies the characteristics of a good investment.
Watch Johan Werth explain the difference between a life and living annuity in the video below:
Choosing the right annuity for retirement
When preparing for retirement, it’s crucial to have a thorough discussion with your financial adviser about your financial goals and how best to use your retirement savings.
According to Johan Werth, Financial Adviser for Consult by Momentum, factors such as the amount of money saved for retirement and the performance of your investment portfolio are important considerations.
Life annuity vs living annuity
There are two main options to choose from at retirement – a life annuity and a living annuity.
A life annuity
This option offers a guaranteed income for the rest of your life, and you don’t need to make any investment decisions.
Your income will be paid for as long as you live, and if you have chosen a guaranteed period and pass away within that time, the remaining balance will be paid to your nominated beneficiaries.
A living annuity
This option provides flexibility in how you invest your retirement savings and the amount of income you receive. This income stops when the initial capital is depleted. If you pass away and capital is still available, it will be paid to your nominated beneficiaries.
Werth says the most important thing you can do is become your own money hero by using a combination of both products. Momentum offers a hybrid annuity, which provides the flexibility of a living annuity and the guarantees of a life annuity.
Watch Martin Riekert discuss the Momentum Wealth Income Illustrator tool in the video below:
The best of both worlds
As people approach retirement, they face several important decisions, including how to transition from pre- to post-retirement.
Naturally, there are also a few financial decisions that will significantly impact the rest of your life, says Martin Riekert, Chief Commercial Officer at Momentum Wealth.
“At Momentum Wealth, we have considered the implications and reimagined our retirement income options with our version of a living annuity,” says Riekert.
This allows you to allocate a portion of your capital to a life annuity, ensuring a portion of your income is guaranteed for life, while the remaining portion continues to benefit from the flexibility of income drawdown and capital investments.
Momentum Wealth also offers an Income Illustrator tool, allowing you and your financial adviser to consider different scenarios and personalise your allocation between the living and life annuity depending on your needs.
“We believe in the value of financial advice and recommend speaking to a financial advisor to make sure your circumstances are well-planned for retirement,” he says.
Watch Theo Vorster simplify the characteristics of a good investment in the video below:
What makes a good investment
Understanding investments is crucial when it comes to managing your finances and building wealth over time. An investment should not only increase in value, but it should also generate an income.
According to Theo Vorster, CEO of Galileo Capital, a good investment has the potential to grow by itself.
Vorster uses cattle as an example to illustrate the power of a good investment. For instance, if you start with 100 cattle, the price of meat may fluctuate, but in a year, you could have 150 cattle.
Over five years, this number could exceed 200. This demonstrates the essence of a successful investment – despite price fluctuations, the herd of cattle, or the asset, continues to grow.
On the other hand, putting a gold coin in a safe doesn’t make a good investment. In five years, you’ll still only have one gold coin.
“The fact that the price of something increases, is not a good enough reason to buy it,” he says.
This simple logic of buying something that increases in value is based on the greater fool theory.
“You hope that someday there will be a greater fool than you who will pay more for the asset than you did,” Vorster explains.
Financial advice is key for making informed investment decisions that will lead to a comfortable retirement. Visit the Momentum website to find a financial adviser, who can help you on your road to retirement.
Financial success is as unique as a fingerprint. That’s the beauty of defining your own aspirations and ambitions. With two tough years of living through the pandemic and an increasing cost of living, it will take great introspection to be honest about where we find ourselves and seek help when we need it, especially from an expert.
The right advice can propel you forward.
Ready to begin your journey?
Financial success is as unique as a fingerprint. That’s the beauty of defining your own aspirations and ambitions. Getting to where you dream of takes grit, determination and most importantly, honesty.
With two tough years of living through the pandemic and an increasing cost of living, it will take great introspection to be honest about where we find ourselves and seek help when we need it, especially from an expert.
The right advice can propel you forward. Our financial advisers have a vested interest in you: what do you value? What are your goals? This deep discovery sets the foundation for a relationship that will bear fruits of success.
Ready to begin your journey?
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