Five steps to security in retirement
THE start of a new year is a good time to start proper planning for a financially secure retirement. According to national Treasury, only six percent of the population will have enough money to retire comfortably.
Statistics show that people are living longer, which adds to the challenge of providing enough for retirement. Steven Nathan, chief executive officer of 10X Investments, has five resolutions for retirement investing to help ensure a comfortable retirement. 1. SET A RETIREMENT GOAL Quantify your goal. You need to calculate how much money you need to ensure a comfortable retirement.
A good place to start is a minimum replacement of 60% of your final salary, or about 10 times your current annual salary. 2. THE LOWER THE FEES, THE GREATER THE RETIREMENT POT Watch out for high fees. You should pay no more than 1,5%, and preferably below one percent.
If you can save one percent in fees, your final pension amount could increase by about 30%. A recent Treasury study showed that if consumers reduce their fees from 2,5% to 0,5%, they could double their final pension. 3. HIGH EQUITY STRATEGY You should have an ageappropriate investment strategy. Nathan advises having 75% invested in growth assets, such as listed shares and property, to reach your goal and generate a return of between five percent and six percent per year above inflation. You can switch to a more conservative portfolio five years before retirement. 4. STRICT SAVINGS REGIME You should save at least 15% of your monthly salary for 40 years to build a sufficient retirement pot. Save as much as you can for as long as you can. 5. COMPOUND INTEREST Ignore shortterm stockmarket volatility and the distraction of market commentators who often encourage investors to switch funds. Your goal is to maximise the size of your investment at retirement and not worry about the short term. — Business
Steven Nathan is chief executive officer of 10X Investments.