[imagesource:here]
Let me get this out of the way up front.
If you happen to be approaching 40 or have popped over the other side of that hill, you’re almost certainly not going to like what follows.
There in the distance lies retirement, a day I have dreamt about since the day I started working.
How and when you retire depends on how well you’ve prepared in the years leading up to it, and South Africa has one of the worst savings rates in the world.
In 2019, it was calculated to be just 15,4% of gross domestic product (GDP).
It’s a sobering thought, especially when you consider that, according to BusinessTech, in South Africa, only 5% of people retire with enough income to be comfortable.
Here come those stats – hold on tight.
By the age of 40, you should already have saved just over three times your current annual salary to be on track for a 75% replacement ratio at retirement.
If you decide to stick it out a little longer in the workforce, retiring at 65 instead of 55 can almost double your replacement ratio.
The graph below shows the impact of retiring at various ages for a person aged 25 contributing at 11,75% of their salary.
The rule of thumb is that you should consistently save between 15% and 20% of your monthly salary between the ages of 20 and 60.
Yes, sure, that’s entirely achievable when petrol prices skyrocket alongside electricity costs and just about everything else. Inflation, hey – what a rush.
Figuring out the best way to one day retire comfortably sounds daunting. There is a simple way to make sure that you’re investing correctly in your future, without the stress of figuring it all out by yourself.
Consequence Private Wealth can assist you with getting your financial affairs in order, and sooner is always better than later. Getting that relationship up and running will help you to plan ahead and manage your immediate finances, as well as your investments and savings.
[source:businesstech]
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