Have you saved enough for retirement?

Cape Town - Knowing whether you have saved enough for retirement is one of the primary causes of financial anxiety for pre-retirement investors, according to Duggan Matthews of income specialist company Marriott.
 
"The current investment environment, characterised by economic uncertainty, coupled with a choice of over 1 000 unit trusts and a myriad of different products, has made it increasingly difficult to make informed investment decisions," he explained.

"In order to plan for retirement, it is, therefore, important to filter out the ‘noise’ and focus on the information you really need to know."

This would include how much income your savings will generate in retirement.

"If the income element of an investment could be reliable and consistent, then the future outcome of that investment could be predicted with a high degree of certainty," said Matthews.

"Information about the income produced by an investment is the key to knowing whether you are saving enough today to sustain your lifestyle in the future."

This income focused approach to investing would typically look at companies which focus on basic necessities, enjoy country wide distribution and have strong balance sheets.

"These companies tend to fare well in both recessionary and growth phases of the economic cycle and are seldom at the mercy of a new idea, trend or fashion," said Matthews.

Tax efficiency

In Matthews' view, one of the most tax efficient means of saving for retirement outside of the workplace is through a retirement annuity.

"Not only is the income earned exempt from all forms of tax, but the contributions made are deductible, subject to certain limits," he explained.

"While the annuity earned from these savings is fully taxable during retirement, the benefits of tax-free capital accumulation from the re-investment of income, coupled with a likely lower marginal tax rate on retirement, makes this a highly tax efficient savings vehicle."

Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers. Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
Rand - Dollar
15.29
-0.2%
Rand - Pound
20.61
-0.0%
Rand - Euro
17.30
-0.1%
Rand - Aus dollar
10.92
-0.1%
Rand - Yen
0.13
-0.4%
Gold
1,841.78
-0.1%
Silver
23.81
-0.7%
Palladium
2,144.90
-0.1%
Platinum
1,023.21
-1.0%
Brent Crude
86.27
-1.9%
Top 40
65,653
0.0%
All Share
72,164
0.0%
Resource 10
71,479
0.0%
Industrial 25
90,959
0.0%
Financial 15
14,713
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot