Thandi Xaba
After many years of working, the thought of retirement should sooth the laboured hands and over-worked mind. Yet, in recent reports the idea of retirement isn’t so realistic. Saving and long-term financial security are steep hills that most people climb for many years.
So then, how realistic is a retirement plan? And can one really enjoy the rewards of years of labour once one reaches the no-more-working age? Experts say it is important that the right calculations are done at the inception of your retirement plan with regards to the inflation and interest rate during that time.
Economist Dawie Roodt says over the next couple of decades the life expectancy of South Africans is likely to increase since people are living longer and are much healthier than in the past. "The average person retires at the age of 60 years. Europeans’ retirement age is around 72-73 years. Perhaps for a secure retirement, South Africa ought to increase the retirement age."
In the 2014 Budget Speech, the minister of finance reported the Retirement Reform proposes a range of measures to lowering costs. "There are number of retirement reforms as far as pension funds are concerned. One is when you resign from a job, you can take a third from your pension and spend as you want. The change is: you will be prevented to take anything until the day you retire," says Roodt.
Retiree David Luckett, who has been on medical pension for three years, says his R1300 pension comes as a blessing towards his medical needs, but adds it is not always enough for food and rent.
Experts say it’s important to start saving from one’s first pay-check to have a secure retirement, to which Roodt adds South Africans are big spenders and not savers.
Experts suggest it’s advisable that with the first pay-check you get, about 15% or so should go towards investing in a retirement plan. So, whether realistic or not, a pension plan could go a long a way in securing a more comfortable retirement.
thandi@centralmediagroup.co.za
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