Retirement on your terms: Mastering the art of saving in a tough economy
The 2023 Old Mutual Savings and Investment Monitor (OMSIM), an annual survey that explores the savings behaviour and financial attitudes of working South Africans, revealed that South Africans are feeling the pinch of an uncertain economy, and retirement savings are being placed on the back burner.
The survey shows that 47% of respondents consider saving for a comfortable retirement their biggest savings goal. At the same time:
- 45% of respondents indicated that they are feeling stressed about finances,
- 54% dipped into their existing savings to make ends meet,
- 34% took out a personal loan in the past year (more than double from the previous year), and
- Over 50% feel like they don't have the finances to deal with an unplanned emergency.
Navigating the current climate
"We live in an era where economic volatility is the norm rather than the exception, and South Africans face mounting financial challenges," says Marius Pretorius, Head of Marketing for Old Mutual Retail Savings and Income.
"That's one of the reasons retirement planning is so important – while you can't necessarily control the economy, it's pivotal to maintain control over your financial future."
The significance of retirement savings
Retirement is a life stage we all aspire to enjoy comfortably. Yet, without adequate savings, this dream can turn into a nightmare. Here's why retirement savings are indispensable:
1Longer lifespans: People are living longer, meaning retirement savings must also last longer.
2Inflation: The purchasing power of your savings diminishes over time due to inflation. To maintain your lifestyle in retirement, you need investments that can outpace inflation.
3Medical costs: As we age, healthcare expenses increase. Without savings, unexpected medical bills can quickly deplete your resources.
4Pension limitations: Relying solely on a government or employer pension plan is no longer sufficient. Benefit levels are modest and may not always be enough to secure a comfortable retirement.
5Financial burden: Nobody wants to be a financial burden on their kids or other family members after retirement.
6Personal fulfilment: Retirement should be a time to enjoy life and pursue personal interests. Adequate savings provide the means to live these dreams.
You're not alone
"Interestingly enough, the OMSIM survey also reveals that only 4 out of 10 working South Africans use the services of a financial adviser," says Pretorius.
"While the economy might be challenging, the reality is that you don't have to go at it alone, and expert help is available."
Given the complexities of modern financial markets and the uniqueness of individual circumstances, partnering with a financial adviser is a wise decision. Here's why:
1Customised retirement plans: A financial adviser can create a retirement plan tailored to your goals, risk tolerance, and financial situation.
2Investment expertise: Financial advisers possess the knowledge and expertise to manage investments effectively. They can help you make informed decisions to maximise returns and minimise risks.
3Risk mitigation: In a volatile economy, managing risk is critical. A financial adviser can help diversify your portfolio and adjust your investments to protect your retirement nest egg.
4Tax efficiency: Financial advisers are skilled at optimising tax strategies, which can significantly impact your retirement savings over time.
5Ongoing guidance: Retirement planning is not a one-time event but a lifelong process. A financial adviser provides continuous guidance, adapting your plan as your circumstances change.
6Undiscovered financial potential: On the surface, it might seem that you are stretching your budget as far as it can go, but a financial adviser is skilled in helping you to discover ‘money within your money’ – allowing you to take care of today’s financial responsibilities while also being able to save for the future.
While the financial responsibilities of day-to-day life might make retirement savings feel like an impossible dream, an accredited financial adviser has the expertise to help you master the art of making your retirement goals a reality.
To get in contact with a financial adviser, visit oldmutual.co.za/retirement or call 0860 60 60 60.
Old Mutual Life Assurance Company (SA) Limited is a licensed FSP and Life Insurer.
Disclaimer
The material is not intended as and does not constitute financial or any other advice. The material does not take your personal financial circumstances into account. For this reason, it is recommended that you speak to an accredited financial adviser to consider all your options and draw up a plan to achieve your financial goals.
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