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Financial fears faced in retirement

Halloween is around the corner, and while some people will don fancy dress to prank and spook their friends and neighbours, this frightening occasion provides a timely platform to consider the real fears keeping people up at night. In particular those in or approaching retirement face uncertainties about the future, which can elicit stress and fear, making the transition to retired life more of a trick than a treat.

At Just SA, our experience reveals several financial fears that retirees or pensioners typically share.

Fear #1: More time, less money  

Retirement can last a long time and financial experts suggest that you need at least 75% of your final pre-retirement income to maintain your lifestyle in retirement. So it is unsurprising that South Africans are worried about having enough money to live on after they retire, especially as we are experiencing a period of extended rising inflation. Furthermore, 70% of those surveyed in Just Retirement Insights 2022 said they would have to change their lifestyle if they lost more than 10% in a market crash.

Fear #2: Outliving savings

Never mind living out your retirement with less monthly income, a common fear facing retirees is the risk of depleting their entire retirement savings pot before they die. Although people are living longer and healthier lives, Just SA’s report shows they underestimate their life expectancy by at least five years. And with only one in three living annuitants in SA drawing retirement income at sustainable levels, the majority face a very real risk of running out of money too soon.

Fear #3: Declining Health

Deteriorating mental and physical health, coupled with the associated costs of medical and frail care, are other significant fears for retirees that tie into the trend of increasing longevity. Added to these is the concern of becoming a burden on your family, who will likely be responsible for you as you age. According to the World Health Organisation, there are around 55 million people living with dementia – with over 60% living in low- and middle-income countries like South Africa, and this number will increase exponentially as the proportion of older people in the population increases.

Face and Overcome your Fears

While the future may seem dark, the good news is that these fears can be alleviated or eradicated if correctly addressed. There are retirement income solutions that can leave you to live out your final years with a higher degree of certainty and comfort.

life annuity is a retirement product that provides a secure, regular income for life that will never decrease, regardless of market performance. With a life annuity, you can secure a guaranteed income to cover essential spending needs for the rest of your life. With this security, the balance of your investment assets can adopt a more aggressive investment strategy, which targets higher returns and can produce a better overall outcome for you.

Simply put, this means that you could expect to have more income during your retirement years (Fear #1), and you will never run out of money (Fear #2).

And should your health be impaired, you may qualify to enhance or increase your starting income from a life annuity, by completing a medical questionnaire, at no additional cost to you, that can only benefit you and not be held against you (Fear #3).

While the road to retirement may be scary, there are options to help you overcome any fears, no matter how daunting.

This article was published in FA News and Cover.

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