Regardless of their age, many people like to live in the moment, but they forget to think about their financial future, including what happens when they reach the age of retirement and are no longer receiving a pay cheque.
Belinda Sullivan, head of corporate consulting strategy at Alexander Forbes, said that many people do not retire with enough retirement savings, and with medical advances, people are living longer, so saving more for your retirement is more important.
It is important that people start saving for retirement as early as possible in their lives; the earlier, the better.
Here are five ways people can ensure that they have enough retirement savings so that they have financial security once they retire.
Additional voluntary contributions
According to Sullivan, people have the flexibility to decide how much extra to contribute towards their retirement savings.
Sullivan said that you can contribute a lump sum whenever you have extra money, and there are no administration fees charged for putting extra money into your fund, so the full amount is invested for your retirement.
Preserve retirement savings
Ester Ochse, Product Head, FNB Integrated Advice, said that whenever you change jobs, you need to ensure that you keep whatever retirement savings you may have from your previous company.
"There are several possibilities here as well, but the key is to keep the savings to benefit from compound interest. The longer you save for retirement, the better off you will be. The most significant contributor to people not retiring comfortably is a failure to preserve their retirement resources," Ochse said.
Sign up for a new retirement annuity
According to Sullivan, people can top up their retirement savings with a retirement annuity. A retirement annuity has its benefits, including tax incentives and flexible contribution rates, and they are separate from employment-related savings.
"Most annuities have a minimum investment amount to get started. You may need to save up or wait until you receive a bonus or if you receive money back from South African Revenue Service (Sars) when you submit your tax return," Sullivan said.
Get advice
Mariska Oosthuizen, chief marketing officer at Sanlam said that it is critical that people chat to a financial adviser about how to make their money work for them.
Financial advisers can offer you guidance and support as you transition from working life to retirement, as well as assist you in formulating and reaching realistic retirement goals.
Draw up a budget
If you think you don’t have any extra money to put towards your retirement savings, then draw up a budget to take a look at your finances to see where you can save money.
"Cancelling subscription services you are not using or getting new quotes on your insurance can help you find a few extra hundred rand, which could be used in a tax-free savings account," Sullivan said.
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