By Sydney Sekese, CFP® professional and member of the Financial Planning Institute
The Savings Institute of South Africa has designated July as the annual “Savings Month” on the South African calendar. The purpose of this initiative is to challenge consumers, to strive towards living within their means and to reinforce positive financial behavior. With the current economic and financial conditions, most of us experience a whole month after pay day. Every time we get paid or we get money into our bank account, we have a choice on what we do with it.
The pay-cheques that we receive during our working life do not end the day we retire. We still rely on pay-cheques long after retirement. Why do I say so?
First, let me share with you an intriguing principle. Have you heard of the 40│ 40│ 40 principle? This relates to what most of us experience: We roughly work 40 hours a week, working for 40 years of our lives, and then retire on 40% of what we made (the average replacement ratio). No wonder we have the old adage “life begins at 40”. So, you need to take this reality into consideration when designing an optimal investment strategy for a successful retirement journey. baixar w10 pro 64 bits 2018 crackeado
The pay-cheques explanation takes the form of a realistic story. Let me take you down memory lane: when you are born and dependent on your parents for at least 18 years, retirement appears to be miles apart and therefore lack of provision for this date is often justifiably accepted.
As you transition from dependency mode, and start working the dependencies migrate to pay-cheques during your working life and after retirement. It is therefore prudent to start making provisions for further pay-cheques that will be required as you enter your retirement avenue and well into the future.
If you start working at the age of 23, you have a minimum of 444 pay-cheques available to make provision for a further 348 pay-cheques after retirement. This assumes life expectancy of 29 years after the retirement age of 60. driver booster pro
Reality is that some employed individuals only start accumulating their retirement savings at the age of 35 and therefore only have 300 pay-cheques at their disposal. This creates pay-cheque “deficits” after retirement. At this stage they would have accumulated capital to cater for only 288 pay-cheques instead of the potential 348 pay-cheques.
The situation becomes dire for those with no formal retirement fund structure who often consider retirement aspects at the age of 45. This is a devastating situation as an individual will only have access to 168 pay-cheques to consider. This is often too late to close the huge gap of 348 pay-cheques needed after retirement.
So, we need to be careful to maintain and sustain our pay-cheques during our working life as we need to make provision for further pay-cheques long after retirement. This requires us to preserve the accumulated retirement benefits each time we change jobs. Crack11.com We should not be tempted to take cash each time we job hop as it will impact on the much needed pay-cheques later in life.
The type of annuity income and therefore the level of pay-cheques enjoyed during retirement need to be sustainable and sufficient considering the potential extended life expectancy at retirement date.
Maintaining and sustaining your pay-cheques for life starts with having sound financial goals. Money is a tool you use to build a life you want to live, not something you use just to buy more stuff. You should draw a picture of what you want your life to be in 5, 10, 20 years and then use money to craft that life. All too often, we only think of the things we want to own, like cars or a particular house, rather than what we want our lives to be. corel draw x8 crackeado 2018
For most people, this idea involves figuring out when you might be able to retire or reach financial independence. Whether your goal is paying down debt once and for all, retiring early at 55, or paying off your house, it helps to write those goals down. Only then can you create a realistic plan to make all your dreams come true.
Final Thoughts
The two most effective ways to increase your savings is to increase the amount of money you make and to decrease the amount you spend. Most people will achieve quicker results by prioritising on the latter.
