The stats tell us that only 6% of South Africans can afford to retire comfortably, according to Janine Horn, a financial adviser at Momentum.
Sisandile Cikido, head of retail investments at Nedbank, said that for so-called “seniors”, people who are over the age of 55, the current high inflation levels and rising interest rates mean that good financial choices have a vital role to play in their financial planning for the future.
“As is the case with most grey clouds, the current increasing-interest-rate environment offers a silver lining in the form of higher growth on your retirement savings,” Cikido said.
“For seniors, particularly those who rely on an income from their saved capital, it’s important to take full advantage of the current higher-interest earnings opportunities.”
Here are four tips for seniors to optimise their money in the current economic climate:
Be precise with your goals
Cikido said seniors should narrow down their goals to hone in on what really matters to them and then create a realistic plan to achieve it, including saving any money as required.
Consider the short-term and the long-term
According to Cikido, it is of utmost importance that people think of and plan for their long-term and short-term goals.
“This type of balanced view is very important because it helps you to choose the right combination of savings solutions to match each of these goals.”
Capitalise on the better interest rates
Cikido said that one of the major reasons that people give for not saving is that they do not believe that the interest rates on savings accounts are high enough.
“The recent interest rate hikes, coupled with the uncertainty in the share investment markets, has created a very compelling environment for savings,” she said.
Side hustle
Nedbank’s research shows that the decline in income during Covid-19 led many seniors to turn to entrepreneurial ventures or side hustles as a way to earn extra money.
Cikido said that seniors needed to leverage that extra income for their longer-term goals.
“It may be possible to leverage the current high-interest-rate environment by saving a portion of that extra income in a long-term deposit account to benefit from the power of compounding over time,” Cikido said.
Coert Grobbelaar, an advisory partner at Citadel, said, “When planning for a successful retirement that maintains your current standard of living, do not underestimate the role of a financial advisor, who will partner with you and guide you on your journey to retirement. This will result in optimised retirement income.”
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