Plan for all aspects of retirement

Retirement is a significant life stage that requires careful planning to ensure that you have a financially secure, comfortable lifestyle in your later years. In South Africa, where the retirement landscape is continually evolving, it is crucial to plan for all aspects of retirement to enjoy a stress-free and fulfilling post-career life.

Financial planning

Financial planning is the cornerstone of preparing for retirement. However, even if you’re still quite far away from retiring, and don’t yet have a specific plan, one thing you can and should do is to start saving as early as possible. A good way to do this is through your employer’s pension or provident fund; or if you’re self-employed, through a retirement annuity. This way you can take advantage of employer contributions and tax benefits to maximise your savings.

If you’re saving through an employer fund, you may be required to contribute a fixed percentage of your salary each month. If you’re self-employed, on the other hand, you can choose the amount you contribute. This is where things can get a bit sticky as it’s always easy to tell yourself that you can’t save very much as your expenses are high.

The remedy to this situation is, of course, to set retirement goals from the outset and use these to direct budgeting and debt management. According to the latest Just Retirement Insights, the percentage of respondents setting retirement goals has increased substantially. In 2018 only 40% of respondents said they set goals for retirement, while in 2024 the figure was 60%.

Healthcare planning

As healthcare costs tend to increase with age, healthcare planning is a critical component of preparing for retirement. Before you choose a healthcare plan, compare different plans and providers, and then select the most comprehensive healthcare plan you can afford. Your financial adviser should be able to direct you to a medical aid consultant for assistance. And don’t forget about medical, or gap, insurance, to help you with costs that your medical won't cover.

The best insurance for your long-term health, of course, is a wholesome lifestyle that includes regular exercise, balanced nutrition, plenty of sleep and preventative healthcare measures.

Lifestyle planning

Retirement isn’t only about finances; it also involves planning for a fulfilling lifestyle. Identify activities and hobbies that you enjoy and plan to pursue them in retirement. Engaging in meaningful pursuits can enhance your well-being and sense of fulfilment and even your health. Social connections are also important, so start cultivating strong social connections with family friends, and community networks so that you stay socially active. This helps to combat loneliness and maintain a sense of belonging.

Plan in advance for travel and leisure activities that you would like to experience in retirement. One way to do this is to create a bucket list of destinations and adventures to look forward to.

Estate planning

Estate planning involves making arrangement for the transfer of your assets and wealth to your heirs or other beneficiaries, and includes:

• A will. Draft a legally binding will to specify how you want your assets distributed when you pass. Update it periodically to reflect any changes in your circumstances.
• Trusts and estates structures. Consider setting up trusts or other estate structures to protect your assets and minimise estate duty for your beneficiaries.
• A power of attorney. Appoint a trusted individual to act as your power of attorney in case you become incapacitated and unable to make decisions.

At retirement

When you eventually retire, you’ll need to choose a retirement income product that at least guarantees to cover your essential expenses for life.

The retirement landscape has evolved, and choosing an annuity for retirement is no longer an ‘either or’ decision between life and living annuities. There are new-generation annuity solutions that can be tailored to suit your unique circumstances and risk appetite when you retire.

If you value the flexibility that comes with a living annuity but want to access a higher, sustainable monthly income, which a life annuity offers, a blended annuity could be the right solution. This innovative concept combines the benefits of a living annuity and a life annuity in one investment vehicle. You decide how much of your investment is allocated to the living annuity and how much is allocated to the lifetime income portfolio.

Retirement planning is a multi-faceted process that requires careful consideration. By taking a proactive approach to it and seeking professional advice where needed, you can pave the way for a secure and fulfilling retirement journey. Start planning today to build the retirement future you desire.