Playing retirement catch-up – what must be done

Just One Lap

You know your number and how much you need to retire comfortably with an income replacement ratio of around 75%.

Problem is, the future state of your savings is nowhere near that number because you either started too late or haven’t started yet.

Chin up

If you’re still young, you have time on your side. Take it and make the best of it. Consider small sacrifices – increasing your monthly contribution with an extra 3% of your gross salary can result in 15% more income during retirement. Saving an extra R100 every month will make a big difference in 30 years’ time.

If you’re close to retirement, put your future interests first. To make a better retirement a possibility will take serious intervention and lifestyle changes.

The following hacks will help when playing retirement savings catch-up:

Just start – even if it’s with a couple of hundred rand every month. It will get easier to save more once you get the hang of it. Keep fees at a minimum. Make tax exemptions work for you.

Tax refund? Invest it in your RA. The same goes for any bonuses. Increase your contribution every time you get a salary increase. Focus on growth and maximise your exposure to equities.

Consult a professional for advice. When you have to play catchup, the last thing you can afford is a mistake. If you’re close to retirement, get a professional to review your portfolio.

Retiring at 65 and not 55 can just about double your retirement ratio.

This article was first published on Just One Lap.