It is important to look at your retirement plan and decide at what age you would like to retire to ensure that you have contributed enough to live a comfortable life post retirement, according to Preenay Sathu, wealth manager at FNB Wealth and Investments.
It is advisable to start planning your retirement as soon as you earn an income to ensure you make sufficient contributions, thus allowing your retirement savings to grow sufficiently over time.
"Looking at your current overall needs as well as what you would like to do in retirement is a great way of establishing how much you need to contribute monthly to live a comfortable retirement. It is advisable for consumers to continuously evaluate their retirement plans to ensure that they meet their long-term goals," says Sathu.
Sathu unpacks key questions you need to ask yourself when looking at your retirement plan:
Why do you need a retirement plan?
Life goals don't stop when you go on retirement. You may have ambitions to travel or invest in a non-profit organisation that is close to your heart.
All this will require some form of finance to fulfil it; therefore, you need to ensure that you have sufficient income to be able to pursue your goals.
Key will be ensuring that you make enough contributions so that you are able to reach your retirement goals.
At what age would you like to retire?
Decide on what age you would like to retire as well as what you would like to do once you are in retirement.
Once you have decided, work out how much you will need and start saving towards that goal.
As the cost of living increases, you will need to evaluate your retirement plan to ensure that you are still on track to have a comfortable retirement.
What are your needs?
It is worth noting that even in retirement, your day-to-day expenses such as food, transportation and access to information such as data and internet will continue.
Therefore, it is advisable to settle all your debts before you go to retirement.
Moreover, you need to be aware of unexpected expenses such as medical bills and take those into account on your retirement plan.
What lifestyle do you want once retired?
Your contributions should factor in the lifestyle you want to lead in retirement.
For example, if you want to pursue entrepreneurship or a "side hustle" once retired, you need to start looking at ways on how you can fund your entrepreneurial journey.