Retirement 101, From caves to computers.
South Africa is sitting on a retirement timebomb, with the data aligning very closely to a widely quoted National Treasury statement that only 6% of the country’s population is on track to retire comfortably.
Some of the key reasons why so many South Africans will face a bleak reality after their working lives come to an end are affordability and lack of planning. A frightening number of people have not formally planned how they will fund their retirement. Of those who have, few are monitoring their progress. Most don’t know whether or not they are on track to meet their goal to be able to support themselves in retirement, never mind in any comfort. The upshot is that many South Africans pay little attention to their life’s biggest investment.
Something’s gotta to give
There are two reasons people fail to properly prepare for their retirement: complexity and human nature. First of all, the perceived complexity of retirement planning is completely unwarranted. For years, planning for retirement has been cloaked in layer upon layer of technicality and unnecessary terminology. The truth is a whole lot simpler. Forget about the terms, the tax deductibility and all the technicality.
In its simplest form retirement planning is nothing more than saving enough capital to fund an income one day when you no longer earn one. It is as simple as that. Obviously, there are products and tax relief that assist you with your planning but they are nothing more than vehicles to get you closer to your goal of having enough. Secondly, human nature is probably the greatest barrier to people successfully planning for the day they no longer earn an income.
It is a well-known fact that you should start saving for retirement as soon as you start working. However, tell the average 20something that they need to follow this tried and tested advice and you are bound to be met with a blank stare or an incredulous laugh. Of course, it is entirely understandable that a young person should feel this way. The thought of pre-paring for the end at the beginning seems preposterous. Besides, young people have better things to spend their money on and the thought of retirement is ...