How to live your best life until you’re 90

Your best life is possible, and within reach, even years after you stop working. It takes some planning though, and recognition that it isn’t too early to plan the life that you want after your last pay cheque. People are living longer now than in any time in history, so celebrating your 90^th birthday is a real possibility. But will your retirement savings last as long as you do? We asked Waldette Stoffberg, business development manager at Glacier by Sanlam, to break down the steps to a life lived well.

Tip #1 Think about the 60-year-old you, even as you’re launching into the world in your 20s.

You may be starting your first, second or even your third job, but you’re definitely following the career you want, and success is a non-negotiable for you. You’re truly adulting and it’s not all bad. You own your first car and have vehicle insurance and medical aid. You’re planning your first overseas trip, soon. But what about saving for retirement?

“Planning for retirement is an essential part of your financial plan, even when you’re as young as your early 20s”, says Waldette.

Tip #2 Don’t go too low.

So, you think you’re saving for retirement by contributing monthly to your employee pension fund at work, but are you saving enough? In your 20s and 30s you might be contributing less than required to your pension fund.

“Any percentage below 10% is too low,” says Waldette. “If your after-tax monthly salary is R15 000, then your contribution should be no less than R1500 per month”, she says. “You have an opportunity annually to increase this percentage, and it really is sensible to do that.”

Many employers do not offer an employee pension fund, so saving for retirement is left entirely up to you to arrange privately, and let’s face it, you’d rather spend the R1500 per month on shoes or gadgets, right?

“It’s tempting not to save for something like retirement that is just so far away”, says Waldette, “but think of the experiences that you’re having now – in your 20s, 30s and even your 40s. Why should they stop the day you stop working at age 60 because you can’t afford them?”

Tip #3 A retirement annuity (RA) is a valuable addition to your financial plan.

Whether you’re contributing to an employee pension fund at work or not, here are some good reasons to invest in an RA:

1. It provides a kickstartto your retirement savings plan. Whether you are a full-time employee, or self-employed, an RA can propel you on your retirement savings journey – either as a standalone solution or as part of a broader retirement savings plan.
2. It offers flexibility. You can pause or reduce your RA contributions if you need to do so.
3. You can enjoy tax benefits. A portion of your contributions is tax-deductible, and you also don’t pay tax on interest or capital gains within an RA.
4. It ticks many retirement savings boxes. An RA potentially offers you the opportunity for investment in a wide range of funds, risk-profiled solutions and share portfolios – customised to suit your individual needs and risk profile.
5. It’s affordable. Even a small monthly contribution can make a big difference in your retirement savings outcome years from now.
6. Your savings are protected from creditors. Your retirement annuity investment is protected from creditors – they won’t be able to take from your savings. This ensures that your savings will be available when it is most needed and for what it is intended – funding your retirement.
7. You can’t touch it. Well, at least not the bulk of it - until you’re 55. Once you invest in an RA, it’s for the long haul. Years from now, you’ll be so thankful for committing to an RA until you reach retirement age.
8. It’s all about you. The underlying investment options in your RA should be selected based on your particular risk profile. Every investor has different needs, lifestyles and risk appetites that can change over time. Understanding your risk profile, based on your life stage and financial goals, is a critical first step on your retirement savings journey.

Tip #4 If you’re still young, don’t invest too conservatively.

In your 20s and 30s, you have the advantage of more time to retirement than people in their 40s and 50s. Investing is a long-term pursuit, so while you’re young, you can take on more investment risk – which potentially secures higher returns – as you will have more time to recoup any possible short-term losses.

Tip #5 Know the monetary values that you’re working towards.

Knowing what you’re saving for and how much you can expect as a monthly income in retirement will help motivate you to start and keep going.

See the illustration below of how much you can save and the retirement income you could expect at 60. Let’s assume three investors all start saving R1000 per month in an RA until they are 60. They each decide to increase their contribution by 10% every year.

Tip #6 Don’t go it alone.

An appropriately authorised financial intermediary will help you put together a holistic financial plan that takes into account your financial circumstances, needs, goals and investment objectives. DM

Find out more

Retirement is different for everyone. From doing less to doing more, every retirement vision is unique. At Glacier, we help you get where you want to be. Save for your retirement with confidence by investing in a retirement annuity from Glacier. Talk to your financial intermediary about the best option for you, based on your lifestyle and needs.

Glacier Financial Solutions (Pty) Ltd is a licensed financial services provider.
Sanlam Life Insurance Ltd is a licensed life insurer, financial services and registered credit provider (NCRCP43).