The Old Diocesan Issue5 Mar2020 - Page 38

planning for
simple and
Saving for retirement may not be the
sexiest thing you could do with your
hard-earned rands, but it’s easier than
you think… if you stick to the basics,
writes Rebekah Funk.
Only 3% of all South Africans have savings of any kind,
according to (rather outdated) June 2018 statistics
released by Old Mutual. Among those who work, the
numbers are only slightly better, at 15% — the lowest
rate since 1990, a recent Investec GIBS Saving Index
They’re shocking numbers, considering most people
who reach retirement will only be eligible for a monthly
state pension of R1,780 — not nearly enough to survive
with increasing costs of groceries, healthcare, petrol,
rent, and taxes.
So how much — and by what means — should South
Africans be putting into retirement savings?
Most financial experts state the general “rule of thumb”
is to plan ahead and consistently save between 15%
and 20% of one’s monthly salary, starting from age 20
— but if you can contribute more, you should.
An even easier way to calculate your needs, says Peter
Doyle, former president of the Actuarial Society of
South Africa, is saving the equivalent of 12 years’ salary.
The longer you wait to save, the more you’ll have to
contribute, he warns, since interest needs time to
And while most retirees aim to receive around 75%
of their final salary in retirement, only about 5% of
the population actually achieves this level of financial
comfort in their retirement years.
If you’re part of the other 95% and are overwhelmed by
it all, what’s the simplest way to save for retirement?
Sygnia’s Deputy CEO David Hufton reckons the best
solution is to go “humble, boring, simple and cheap”.
And that means one thing: invest in passively managed
index tracking funds.
Index funds are simple, low-cost, transparent, zero
maintenance and eliminate the guesswork of buying
stocks and bonds. “It’s a strategy that can help your
money grow at a faster-than-inflation rate — key when
saving for retirement,” he explains.

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