Want to enjoy your RETIREMENT? Let Nedbank show you how, as well as how to make your money last longer June 2017 see money differently Nedbank Ltd Reg No 1951/000009/06. Authorised financial services and registered credit provider (NCRCP16).
Introduction If you’re properly prepared, retirement can be the best time of your life • The thought of retiring can be a scary, but with a trusted advisor , retirement can be the best time of your life. • Being fjnancially ready is only one part of being ready for retirement, but you also need to be mentally , socially , emotionally and physically ready to enter the next stage of your life. • Be curious – there is much to discover after working for so long; remember, there is a “life” after working full-time! • It is also very important that you plan for this new stage of your life and investigate and embrace the new possibilities that await you. 2
Topics of discussion If you’re properly prepared, retirement can be the best time of your life 1. Being emotionally , physically and fjnancially ready for retirement. 2. Why Financial Planning is vital for a successful retirement. 3. Using a budget tool to assist you to become debt-free when you retire. 4. The importance of Wills and Estate Planning in retirement, to avoid becoming a burden to your loved ones. 5. Cost-effective, safe and secure banking solutions . 6. Investing for your future. 7. Starting a small business to supplement your retirement income. 3
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Being emotionally and physically ready 1 for retirement Health and wellness Look after yourself before you retire by following a healthy lifestyle, including: • Regular exercise. • A balanced diet. • Getting suffjcient rest. • Limiting your alcohol in-take. • Not smoking. 5
Be prepared for change Retirement will bring about changes in your lifestyle and the more prepared you are for them, the better. Change can be a good thing, you need change to: • Learn, grow and achieve your goals. • Be creative and recognise new possibilities and opportunities. • Deepen your spiritual awareness. • Renew ‘us’ (you and your partner, family and friends). • Preserve what we have and what we have achieved. • Protect what we care about. Life can change in an instant but from change comes acceptance, creative solutions and integration. 6
Purpose/planning Everyone has a purpose in life, a unique gift or special talent to share. Successful people have clarity about their personal purpose. For this new life stage, you will need to have: • A clear vision and plan. • Reason/s for being/existing. • Daily plans to keep you productive and in good health. Retirement is both rewarding and challenging! 7
Why Financial Planning is important to 2 retire successfully Start saving today for the retirement you deserve Most of us dream about the day we can stop working and spend our golden years doing the things we enjoy, like cooking, growing vegetables, spending time with friends and family, travelling or looking after our grandchildren. But the retirement you are dreaming of is only possible if you PLAN for it. Did you know? • Only 6% of every 100 South Africans can afford to retire successfully. • 77% of South Africans are worried about retirement. • Only 12% of people who belong to a retirement fund retire reasonably well; you cannot just rely on the money you get from your employer’s retirement fund. 8
Good advice for a happy retirement • Time is your best friend! The sooner you start planning and saving for retirement, the better. • Keep committed by saving something every month and increase this amount whenever you can. Everybody can put something away. It might mean givng up something but saving R5 a day (e.g. less than the price of a soft drink). This small saving on its own can add up to around R150 a month. • How much is enough? - As a rule of thumb, you’ll need about 70% of the income you were earning in the year before you retired to maintain your standard of living once you are retired. - So, if you were earning R10,000 a month in the year prior to retirement, you would need to earn R7,000 a month after retirement from your pension/ retirement savings. • The important thing is to decide TODAY where you’d like to be TOMORROW. • Remember, every day you put off saving, puts you even further behind. • The earlier you put your retirement plan in place, the more chance you have of living the life you want to when you retire. • The basic formula to calculate your retirement savings is: Contributions + investment growth = retirement amount. 9
Where to start ? A qualifjed money expert – also known as a fjnancial expert (planner or banker) – will help you to choose the best ways to save and invest your money for retirement. They will look at your current situation in terms of your age, income, any debt or savings you may have and the everyday things you like to do (in other words, your lifestyle). They will then use this information to get a better idea of expected fjnancial needs in retirement. 10
A few things you should know about retirement savings: • The more you contribute towards your savings, the higher the base will be to grow your investment. • The higher the investment growth above infmation the more you will have at retirement. • Infmation erodes the buying power of money over time. It is therefore crucial that your investments always match or beat infmation , otherwise you may have to make do with less in retirement. • When changing jobs, it is important that you try your best to preserve your savings and not cash in your accumulated benefjts . • Most of us belong to what is a known as a defjned-contribution fund which means that we, as the members, bear the risk of investment growth on our contributions and the company we work for does not. It is therefore critical to keep track of, and to understand, the state of your retirement savings. 11
3 Budgeting A budget is a plan for what you are doing with your money. It is useful in so many ways: • It helps to create a visual spending picture. • Eases decision-making about spending and saving for the future. • Encourages cautious spending and disciplined savings. • If followed, it will help you meet your fjnancial goals. • Helps you feel less fjnancial stress. • Helps you to be realistic in your expectations. • Helps you to understand the effect of each fjnancial decision on achieving your goals. • It puts YOU in charge of your fjnances. 12
What does fjnancial readiness look like? Budgeting – what are you doing with your money? Non-essential items Essential items These items are These items are Regular Irregular necessary, but needed to survive income income and function, and flexible and the the expenses are expenses could inflexible. be reduced. Luxury items These items are Once-off wants and are income not necessary, and the expenses can be cut. BUDGET/FINANCIAL PLAN 13
Financial readiness – needs vs wants Wants Needs Things we don’t really need, Things we must have in order but would like to have. to stay alive. “Little voice checklist” • I deserve this. • It’s on sale and won’t be here later. • I earned this. • It’s buy-one-get-one-free, so I should get it and save. • It’s been a hard day/week. • I’m getting a bonus in a month’s time. • I’ll get this now and then not get that later. • It’s only (insert rand amount). 14
Financial readiness – drawing up a budget (A) Monthly income R (B) Monthly fixed expenses R Net income R Bond/rent R Regular income R School fees R Other R Accounts/instalments R Savings R (C) Variable expenses R Groceries R Airtime R Transport R (D) Discretionary expenses R Item 1 R Item 2 R Total income Total expenses R Surplus or shortfall R 15
Why Wills and Estate Planning is vital to enjoying 4 your retirement and to avoid becoming a burden to your loved ones What is a Will? A Will is a written document (hard copy) that: • Meets certain legal requirements prescribed by the Wills Act. • Indicates how and to whom a person’s assets or property are to be distributed in the event of his/her death. Importance of a Will The assets or property of a person who dies without a Will are divided among relatives, according to a set formula. This formula may be far removed from the wishes and true intentions of the deceased person, resulting in a confmict among relatives. The purpose of your Will is to indicate how assets or property are to be divided among your loved ones. But it will also: • Protect the inheritance of an heir by way of testamentary trust • Nominate a guardian for minor children • Nominate an executor • Nominate a trustee. Your testamentary trust A trust is an arrangement whereby you give someone else the power to manage your assets on your behalf or on behalf of someone else. Your testamentary trust is established in terms of your Will to manage and protect the assets of minors, other family members, charities or other nominated benefjciaries, and becomes effective upon your death. Your nominated executor and trustee To nominate an executor for the administration of your estate and/or a trustee to manage and protect the assets of your loved ones requires a professional person or institution. Nedgroup Trust Limited is a registered Trust Company and the fjrst trust company to be registered in South Africa, in 1834. We have a wealth of experience and expertise to offer our customers and their families. 16
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