Five ways to plan for your retirement

June 15, 2021

Reassess your finances

You’ve been planning your retirement for years, but if anything has negatively affected your savings, it may be time to reassess things.

“It’s important to understand that finances are only one component of retirement and although significant as the enabler to enjoy a fulfilling retirement, health, happiness and wealth are interrelated and finances should not take priority over your wellbeing,” says Alan Botha, a director and wealth manager at Jurgens Group.

“Planning, assessing and regularly updating your retirement plan with your financial adviser is important, but a retirement plan must take a holistic view of the person and have built-in flexibility to ensure that it is robust enough to cater for ongoing changes when ‘life happens’.

A mindset shift about income, not investments, needs to take place, where essentially three categories of income need to be funded:

  1. Minimum retirement income required for the bare essentials (monthly budget), conservatively invested.
  2. Flexible income requirements to fund your desired lifestyle, moderately invested
  3. Nice to have, which would be able to be invested more aggressively

Choose the right medical aid

“Your medical aid is extremely important as this is the time when you are most likely to actually use the benefits you’ve been paying for,” says Alan. “You need a good understanding of the benefits and limitations of your medical aid plan and should add on gap cover to ensure that any self-payment gaps, which may not have to be budgeted for, are not funded out of your retirement savings, which could derail retirement planning objectives.”

Consider long-term care

“The impact of medical and technological advances suggests we will all live much longer, and it is, therefore, important to plan for long term needs and ongoing care, especially in South Africa where families are distributed around the globe,” advises Alan. High care and frail care facilities are extremely expensive and this planning must be catered for in a well-constructed and considered retirement plan.

Prepare to downsize

“Housing and medical care are the most expensive budget items for most households. Your home is probably also your most valuable asset so optimising your housing to best achieve your retirement plan is critical to your retirement success,” says Alan. Whether you’re still paying a bond or have completely paid off your house, now is a good time to look into a smaller house and get settled in the area where you plan to retire.

Visualise your future

“You want to have purpose and meaning in your life, to experience things that make an impact and bring joy to others, to be inspired and try new things, do something memorable and always keep a bigger perspective in mind that retirement is not the end, but a signal of new beginnings with unconstrained choices, “ comments Alan.

Studies have shown retirees who have no particular hobby are more likely to suffer from depression so It’s important to build new relationships within your community and new hobbies.

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