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I’m Currently Retired – What’s Happened to My Nest Egg?

Retirement should be a time for new positive adventures. However, due to recent market realities, this picture has changed. Many investors are currently seeing a decline in the value of their retirement capital. Make an appointment with your financial planner so you can overcome this decline.

How Sanlam experts are navigating these challenges

Ways to optimise your retirement savings

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Roenica Tyson, Investment Product Manager at Glacier by Sanlam

Ways to optimise your retirement savings if you haven’t saved enough

Audio - Five things to do if your retired

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Five things to do if you’re retired and running out of money

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After being impacted by global turmoil previously, the markets have always recovered and will do so again – it may just take some time. It’s now more important than ever that you remain level-headed and stay the course on your savings and investment journeys. Making changes to your investment strategy at this stage could result in you not benefiting from investment returns when the market turns upwards again. Don’t spoil your years of hard saving and planning with short-term, emotion-led decisions.

That said, if your goals or needs have changed, it’s good to review your savings and investment plan with your financial planner – something you should ideally do regularly, or as your needs change, in any case.

Please consult with a financial planner before you take any action regarding your savings and investments

It’s important not to make hasty decisions based on fear. Switching to a lower risk portfolio can lead to ‘locking in losses’. Remember, cashing in at a low point makes a paper loss a real loss.

Making emotional decisions, based on short-term market fluctuations, may result in more harm than good and destroy the long-term value to your savings. The old saying ‘It’s not about timing the market, but about time in the market’ remains true.

Please consult with a financial planner before you take any action regarding your savings and investments

If you’re invested in market-linked portfolios

Over the short term, you’ll probably experience negative returns. But don’t panic: history shows that markets recover over the medium to long term. History has also taught us that, in time, there will be recovery in the financial markets.

If you’re invested in retirement funds

Retirement fund portfolios are spread across various asset classes, such as bonds, property, cash and international assets, to reduce underlying risk. Your retirement savings are also protected (but not guaranteed) by the limitations of exposure to asset classes enforced by Regulation 28 of the Pension Funds Act. This helps by diversifying your portfolio. The most important Regulation 28 asset class limits are as follows:

  • Equity 75%
  • Listed property 25%
  • Offshore assets 30%*
  • Hedge funds 10%

*As prescribed by the South African Reserve Bank.

If you’re invested in a lifetime investment option, your monies are gradually moved from high-risk portfolios to lower-risk portfolios as from 6 years before your normal retirement date. Lower-risk portfolios have less equity exposure, which reduces the impact of the falling markets.

Please consult with a financial planner before you take any action regarding your savings and investments

  • Review where you can reduce your monthly costs, in order to reduce how much of your retirement savings you’re drawing on. Every little helps, from cutting back on your entertainment expenses to reviewing your various subscriptions and debit orders to see what could be reduced.
  • Consider post-retirement savings and investment products that are relevant to your life stage while offering the opportunity to further grow your wealth. Glacier by Sanlam offers such post-retirement products; speak to your financial planner to discuss these options.
  • Make the most of discounts and savings available to pensioners, for example seeking levy relief from your municipality.
  • Ensure you’re making the most of your tax-free allowances from the government each year; for example: have you topped up your tax-free savings vehicle since the government increased your annual allowance from R33 000/year to R36 000/year?
  • Keep yourself as healthy as possible by remaining active, social and by taking up a hobby or light exercise. One of your biggest financial drains as you age will likely be your healthcare costs; do what you can now to keep your body moving and your mind busy.
  • If you can, consider taking up a part-time job or paid role. You’re an experienced individual with buckets of life experience and wisdom to offer individuals or businesses – investigate how you could put these assets to good use and generate a form of income, too.

Please consult with a financial planner before you take any action regarding your savings and investments

Saving for Retirement

By investing a lump sum or some of your salary each month, you can grow your money over time so that you can retire comfortably. No matter how much you need to or can afford to save, the most important thing is to stay committed to saving.

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Retirement Preservation

If you are retrenched or move jobs, you can maintain your retirement plan by moving it into a preservation fund. Resist the temptation to cash in your savings, as it will be very hard to make up for the value you’ll lose.

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Retirement Income

If you are retiring soon or are already retired, you need to draw a monthly income from your savings to maintain your lifestyle. You also need to manage your retirement savings to ensure it lasts throughout retirement.

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Read more on how Sanlam experts are navigating your challenges

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