Your Career Journey: Planning for Retirement – Part 2
In part 1 of this series, Clarette Lombard (Sanlam Financial Adviser) shared about planning for retirement. She explained what retirement is, and why you need to save for it.
So in this post, she will look at how much you need to save, and how.
Crunching the numbers
Taking inflation and market volatility into account today, below is a summary of how much you should save in order to retire comfortably.
The percentage you need to save depends on your gender and the income solution you plan to use after retirement. Women have to save more for retirement because they, typically, live longer than men.
Women often have unique challenges when it comes to saving and planning for retirement. This is due to many spending years raising children and maintaining family units. As a result they find themselves unable to live comfortably in their retirement years.
*Note: these are benchmark figures only to assist with your retirement planning. Consult a financial adviser for your personalised retirement planning strategy.
|Start saving at||% of income to save|
|20 years old||12 – 17%|
|30 years old||20 – 25%|
|40 years old||30 – 40%|
If you want to get R25 000 a month from age 65, this is what a MAN should save in rand terms:
- A 20-year-old needs to save around R5 900 per month, increasing annually with inflation
- A 30-year-old needs to save around R8 900 per month, increasing annually with inflation
- A 40-year-old needs to save around R14 600 per month, increasing annually with inflation
- A 50-year-old needs to save around R28 300 per month, increasing annually with inflation
This is what a WOMAN should save:
- A 20-year-old needs to save around R6 800 per month, increasing annually with inflation
- A 30-year-old needs to save around R10 400 per month, increasing annually with inflation
- A 40-year-old needs to save around R17 000 per month, increasing annually with inflation
- A 50-year-old needs to save around R33 000 per month, increasing annually with inflation
The above calculations are for illustrative purposes only. They assume the following:
- inflation of 6%
- an investment return of inflation plus 3% after costs
- and using income guidelines for Sanlam’s Investment Linked Living Annuity (ILLA).
Is it too late to start investing?
Despite thinking that one should save 10 – 20 % of their salary each month, according to research, most Millenials are not investing yet. They cite “not having enough money” as their main reason.
The old adage promises us that life begins when you hit the 40th mark. But it also means you are getting closer to retirement! So, what if you haven’t started saving for your golden years at all? People in their forties and fifties therefore often need to play catch-up to ensure sufficient retirement funding.
Fortunately, at this age, you are likely to be earning a comfortable salary, and investing in a retirement annuity (RA) will give you tax benefits so that you’ll ultimately see more of that money.
Ways to Make Saving Fun
Splurging, splashing out, shopping sprees. Let’s face it: there are few things more enjoyable than spending money. On the other hand, saving money is a bit of a drag, right? Well, not necessarily. Sanlam compiled a list of savings tips. With the right mind-set and these tricks up your sleeve, you can certainly make saving money as enjoyable as spending it. These tricks will go a long way to ensure your retirement planning doesn’t fall by the wayside!
- Play the numbers game – pick a “random” number that holds significance for you. Save towards that!
- Start savings support groups – saving doesn’t have to happen in isolation. Team up with others to save towards a common goal.
- Challenge someone to a “save-off” – see who can save the most in the shortest time.
- Save small sums of money – use the “micro-investing” strategy. Bigger isn’t necessarily better. Instead, the best strategy is the one that works for you.
- Draw up a list of (cheap) treats – celebrate the small victories by treating yourself to a cheap treat.
- Make an event of it – supper clubs or clothes swaps can be the ideal opportunity to encourage a community of savers.
- Reframe your thinking – you might be cutting down on something enjoyable to save money. But that means more time for other (free) things!
- Set a time-of-the-year challenge – resolutions aren’t limited to the new year. Ever thought of making 2020 the year of staycations?
Read more in the Sanlam article here.
In conclusion, the secret to any recipe is making it your own. All the ingredients can be there, but you need to bring them together.
These ideas and tricks shared by Clarette are fantastic to get you started on your career journey of planning for retirement. So, happy planning!
*Note: this information has been largely drawn from Sanlam’s resources. Be sure to visit Sanlam’s website for more information.
About Clarette Lombard
Clarette Lombard is a Sanlam Financial Adviser and Investment Specialist who takes great care to assist her clients protecting their assets and growing wealth. With her team, they bring change to the way people look at finances. They have seen success with clients who diligently followed the advice and personalised financial planning process even since these clients were students and are now financially far ahead of their pears. She enjoys her client meetings but can also do the full financial planning process with you online.
Contact Clarette Lombard to put your financial goals in action.
- Email: [email protected]
- Phone / Wapp: 079 113 0044
- Office: 082 385 9359
- Facebook: Clarette Lombard