Can you afford to retire?

The name says it all. Can you quite literally and figuratively afford to retire? Did you put away enough money into savings and investments to enjoy a real return?

It is estimated that only 6% of South Africans can afford to retire completely independently of others – a shocking figure.

So why is it that such a low percentage of South Africans are able to retire? The answer is simple. South Africans do not have a mentality of saving. Blame it on low wages, the economy, socio-political background… no matter what the reason, there is no culture of saving.

Remember when you went to the shops with your parents as a kid and asked for basically everything you could get your hands on and your parents just turned around and said “NO”? That’s the attitude you need to adopt yourself to control your own spending.

The wise always say that you should save first, then spend what’s left after saving. This rule applies no matter who you are. You can’t have everything you want and you can’t buy everything you get your hands on. Sometimes you need to make the hard decision and shy away from instant gratification.

You should be saving and putting away about a third of your monthly salary if you want a comfortable retirement. If you are a freelancer of self employed and your monthly income fluctuates, then you should work on projected figures. (Total yearly income, divided by 12). This sounds impossible, but the answer is simple – live below your means!

This money can’t just lie in a bank account either as your interest is so low that you will never see a real growth on capital. You should be investing this money into Unit Trusts, Endowments and ideally Retirement Annuities to get you a greater return on investment through higher interest rates.

So how do you know if you’re putting away enough? The short answer is, you probably don’t… You should speak to a Financial Advisor who is able to do a full financial needs analysis to determine how much money you’ll need on a monthly basis once retired, how long you have left to save and work back from there to determine your ideal monthly savings.

The truth is often times very shocking as you get plenty of advisors running around telling you that you should take out a R500 per month Retirement Annuity if you want to retire. In the grand scheme of things, this won’t even be a drop in the ocean compared to what you should really be putting away!

While it’s always a good idea to start somewhere, and put away something rather than nothing, you should be taking matters into your own hands and be increasing your monthly contribution as often as possible to be able to get to one third of savings towards retirement.

This may seem like a daunting task to face, but the long term reward would be so much more worth it than instant, smaller rewards that will in essence waste your money over the years.

For more information regarding retirement, please make sure to contact the Smart Planner to help get you into the right savings culture, with the right product for you.

 

From the man himself – Spend what is left after saving!

 

Being Rich vs. Acting Rich

Have you ever noticed how some of the richest people in the world live such mediocre lives, yet those who live lavish lifestyles don’t really have a lot of capital? It’s the basic principle of being rich vs. acting rich.

Warren Buffet plans his breakfast meals according to the stock market each morning. If the stocks did well, he’ll have a slightly bigger breakfast, if the stocks dropped, he’ll have a slightly smaller breakfast. Why on earth would one of the richest men in the world need to do that? The answer is, he doesn’t, but he understands the concept of living within his budget.

Rich people are rich because they find ways to save money. They buy less unnecessary “wants” with instant gratification like take-out and they find ways to settle their debts quicker. In the end, they have a clear focus on the bigger picture, rather than focusing on impulse buys.

Ideally you’d want to live debt free as quickly as possible. This means cutting your budget to live well under your means and paying back your debts twice as fast. This way, you lose out on all the extras in the short term, but in the long run you’d have saved thousands on interest alone.

That’s why you often see people who are money rich wearing hand-me-downs and driving reliable cars because they understand the value of actual money and they make sure that they save as much of it as possible.

People who buy flashy and expensive things have an inferiority complex and find the need to show off due to society’s pressures. You should only compare yourself to you, or you’ll live a life off endless stress inducing debt just to “keep up with the Joneses”.

The short answer is this – Live below your means, pay off your debts as quickly as possible and put as much money away as you can into savings and investments. That’s how you’ll be truly rich!

The choice is yours. Do you want to live a life of endless stress but have all the latest technology and face the chance of losing everything anyway? Or do you want to live a stress free, debt free life with real money in investments that keep multiplying and own everything you have?

Make sure you plan the smart way… contact us today for help and advice on becoming financially smart!

Living below your means leaves more room for savings as well as financial stability and control. Don’t get caught up in the rat race!

Why Freelancers NEED risk cover

There is always a debate on the financial needs of freelancers in South Africa. Do you need insurance cover? Do you need medical aid? The most difficult question though is, “Can I afford it?”

Freelancers are often met with irregular incomes as jobs fluctuate according to the job market at the time. Due to this insecurity of income you tend to cut out any recurring expenses, more often than not those that help secure your health, future and finances.

The more important question would be, “Can I afford not to have insurance?” As a freelancer you don’t have income security so wouldn’t it be wise to protect the income that you do have? On top of this dilemma you face another problem staring straight at you – you are your own and only means of income. What does this mean?

This means that you are your own biggest asset. You are crucial to your own income and if you, for whatever reason, cannot pitch up for work, you have no income. Unlike most conventional jobs, no one else can do your job for you because this would just mean that you have been replaced. This also means that you cannot afford to get sick or take any “off” days.

Let’s say you get in an accident, or become unable to work due to illness or disability, where would your income come from if you are your only means of income and you are unable to work?

That is why it is imperative for freelancers to take out self-insurance as the former is simply too risky. Can you afford to risk it all? To let fate decide the future of your family or home?

Any business would surely take out the highest insurance on their biggest asset to secure their jobs, employees and their families. If you are a walking, talking business in your own right, wouldn’t you do the same?

With a disability and income protector policy in place you can protect your income in times where you cannot predict your health. Don’t look at life insurance as a sales scheme, but rather as a solution to an ever increasing list of financial demands weighing on your shoulders.