Golden Years
They’re known as the ‘Golden Years’ – the years in which we’d like to imagine ourselves living comfortable, blissful and independent lives. While financials and health curveballs are known to often put a spanner in the works, it doesn’t mean that retirement has to be a struggle.
Crucial to a happy life after those working years are a whole lot of other things.
Escape the house
The happiest retirees are usually those who make it a priority to get out of their comfort zones and participate in activities that are highly social. Socializing is one of the most important contributing factors to people living longer lives and being around other people, interacting, exploring and bonding are all paramount to happiness.
Help someone else
Volunteering your time to helping other individuals or organisations is part of the core pursuit of happiness for retirees. As you help others, you can feel a greater gratitude for the things that you have and a greater connection to the people around you. Think of all of the events, socialising, giving back and making a difference that go with volunteering that can keep you busy.
Eat well
Our bodies need proper fuel to remain strong and active, so with age, foods that are high in fibre become of special importance. At the same time, older adults are more susceptible to dehydration, so try to drink more water every day. Don’t let meal times become boring or lonely; find others to spend meal times with so that you can enjoy social interaction while you are enjoying your food.
Exercise
It’s never too late to start. First, get your doctor’s permission, then find some form of activity that interests you and get involved. Look for health clubs that have classes especially for older adults. Exercising does not have to be overly strenuous either; going for a brisk walk every day could be a great way to stay healthy and active.
Building a resilient retirement portfolio
Shreekanth Sing, Technical Legal Adviser, PSG Wealth shares some insights on saving for retirement which is undoubtedly the most challenging investment goal most people will face. Your retirement portfolio will need to sustain you in retirement for 30 years or more, so the stakes are high.
So, what should you bear in mind when building a robust retirement portfolio that goes the distance?
Firstly, take stock of how much income you’re likely to need in retirement then ensure you accumulate enough capital to be able to deliver that.
Your ability to do so will depend on how long you save for, how much you save and how you invest your money (both before and after retirement).
The importance of advice
Given the consequences of getting it wrong, it really is worthwhile consulting a suitably qualified financial adviser. Many industry insiders – very capable of “doing it themselves” – still opt to make use of the services of other qualified financial advisers.
Having an outside perspective with an unbiased view (and using your adviser as a financial coach) make an adviser’s input very valuable and can help you achieve a better long-term outcome.
How much will you need?
The rule of thumb is to target a minimum replacement income of 75% of your last working salary. Of course, this differs from person to person. If you, for example, want to travel in retirement or leave an inheritance it would be smart to target a higher replacement ratio.
To fund this level of income, you need to save at least 15% of your salary over your working life. If you start working later in life, start saving for retirement later or don’t preserve your retirement savings when switching jobs, this ratio creeps up. And since life expectancy is increasing, and medical science is improving rapidly, you could find your retirement savings having to support you for longer than originally planned. So see these guidelines as the starting point in your planning, rather than the end goal.
Maximise your retirement contributions and save on your tax bill
When structuring your salary, it’s tempting to contribute as little as possible to your retirement fund; but the long-term impact of this decision is devastating. So rather choose to contribute as much as you can. With the various tax incentives on offer, the impact on your take-home pay may not be as bad as you imagine.
Make sure you invest with growth in mind
Ensure your retirement portfolio is diversified and investing in enough growth assets. You need to ensure your money grows as much as possible to reach your target. Remember, retirement portfolios must comply with Regulation 28 of the Pension Funds Act, which aims to protect your retirement savings from the effects of poorly diversified investment portfolios. This is done by limiting the allowable exposure to more risky asset classes in investment fund selections to prevent unnecessary risks being taken with retirement money. For example, it limits equity exposure (including offshore exposure) to a maximum of 75% of the total portfolio.
