When the time comes to bow out, make sure you’ve planned ahead and you have yourself covered for the future.
By Craig Falck of Africa Report
Photograph: © Felix Mizioznikov | Dreamstime.com
It doesn’t matter whether you’re self-employed or have built a company that employs hundreds of people around the world; you are going to have to retire one day. While some people work well into their 80s, most of us will be giving up our day jobs early and hopefully settling back to enjoy what we’ve worked hard for during our careers. But in order to enjoy this stage of your life, you need to have planned for it. Here are some handy tools that’ll get you ready for a life after work:
Retirement Annuity: This is probably the most commonly used and most well-known tool. Basically, you pay money into the annuity every month while you’re working, and when you retire it is eventually due to you with interest. This gives you a sizeable lump-sum that you can then invest or live off. The benefits of a retirement annuity are that it’s tax deductible as well as sponsored by the taxman up to certain limits. Once you’ve reached retirement, one of the best ideas is to place your money into a living annuity. This kind of plan pays out income payments regularly (almost like a salary) and also has other tax benefits.
Government Retail Savings Bonds: This option is very underrated and underutilised in a country like South Africa. Very similar to retirement annuities, you invest your money – except instead of monthly instalments you pay over lump sums. While they don’t accumulate in terms of 1 + 1 = 2, you get the benefits for each one separately. There are various options such as fixed deposit, short-term deposits and longer-term deposits, accumulated income or monthly payment options where you receive an interest payment every month for the money that you have invested. It’s like having a fixed deposit at the bank, except there are many more benefits for investors, such as higher interest rates and that should be enough reason to consider them.
The retirement calculator: Helps you work out how much you need to be saving and putting into a retirement annuity. Most financial institutions, such as Old Mutual, have one on their retirement information website. Basically you put in your information and press the “submit” button. It will then work out how much money you need to be putting away to get the amount that you want paid out every month. It’s a basic tool that makes tedious calculations take mere seconds, and it will help you to accurately plan your retirement schemes.
Retiring is something that all people look forward to. But in order to be taken care of properly, you need to take precautions and plan your financial future wisely. Luckily, there are consultants and financial wizards who are more than willing to help you. It’s up to you now to act and look after yourself.
