For most individuals, finding themselves in the ‘senior’ age category comes as something of a surprise. For one, many are still leading vibrant and full lives in their late 50s and 60s, so the ‘senior’ label hardly feels appropriate. Some also feel like the senior part of their life snuck up on them far too quickly.
The good news is that approaching, or reaching, retirement age is by no means the end of your life as you may have lived it; it’s merely the start of a new chapter. That’s according to Sisandile Cikido, Head of Retail Investments at Nedbank, who points out that, while many people have financial concerns as they get older, with a little planning and some good money management, this stage of your life can be just as fun, exciting, and rewarding as those that went before.
‘Financial uncertainty is the most common fear we see among the majority of our clients aged 55 plus and individuals approaching their retirement years are worried about whether they have saved enough to ensure that they won’t run out of money,’ says Cikido.
She says that the fear is understandable, given the sudden transition that retirement represents from having financial control over your finances while you’re working and earning a steady income, to suddenly having to rely on the resources you’ve put in place to provide you with the income you need. ‘Many people experience fear as they enter retirement because they feel like they have lost control of their money, and when you add rising costs of living, increasing healthcare expenses, and the reminder that Covid-19 provided of how vulnerable our money and investments can be, the financial stress that many people associate with getting older is understandable.’
But Cikido urges older South Africans to transform the fear and uncertainty about their financial futures into proactive plans for their future, emphasising that being in your 50s or 60s doesn’t mean that it’s too late to see your money differently, and take decisive action to secure a better financial future. That’s especially true when you have a proven financial partner to guide you, an array of top-class savings and investment solutions at your disposal, and many options available to you to continue earning, or supplementing, an income in retirement.
‘The way we think about retirement today is very different from the understanding that previous generations had of it, which means that our plans for our senior years also need to evolve and transform.’
She says that while the foundation of any retirement plan still obviously needs to be a sound investment strategy, the idea of hanging up your work clothes on retirement day and then spending the rest of your days sitting on the couch are long gone.
‘Today’s seniors are healthy and dynamic, with so much experience, insight and value still to offer, which means that most of them have no desire for a traditional retirement, preferring instead to find ways of staying active and continuing to earn an income.’
Cikido adds that acting on this ability to supplement your retirement income is an excellent way of addressing any fears you may have about outliving your money, because it means that you can leave your retirement savings invested and growing for a number of years longer, before you have to begin dipping into them. She explains that having such a financial buffer in place is also a good way of ensuring that you are not forced to access your retirement savings when markets are performing poorly, which could result in a loss of value, as many people discovered when the markets declined suddenly due to Covid-19 early in 2020
‘Of course, a side hustle is not the only way of generating additional income in retirement. An even better option is to have a long-term retirement savings plan in place, that includes a diverse range of savings and investment accounts. These could include fixed-term savings with capital protection, like the Nedbank Optimum Plus fixed deposit, to more liquid day-to-day savings accounts and, of course, a tax-free savings vehicle for efficient long-term growth with quick and easy access to your money after you retire.’
She also points to the importance of sound advice from a trusted financial partner as being one of the cornerstones of a successful plan for secure senior years. ‘Nedbank is much more than a product provider; we’re a trusted partner to all our clients, and we especially recognise the value and importance of walking with our senior clients on their pre- and post-retirement journeys.’
The October 2021 edition of the free IOL MONEY digital magazine focuses on the financial planning process and how to tell whether or not an adviser is working in your best interests. To read (or download) the latest IOL MONEY digital magazine, go to the issuu platform here.
PERSONAL FINANCE