We speak to a 41-year-old entrepreneur and a 67-year-old pensioner about how they’ve saved for retirement and what they wish they’d done differently.
James Connor* is a 41-year-old business owner from East London:
Have you started planning for retirement?
Yes, I’ve been specifically saving for retirement for about eight years now. I’ve calculated my magic number, which is the amount that I need to save in order to retire with the lifestyle I have now. I’ve also done the projections that show me how much I need to save every month in order to reach my magic number. I monitor these figures monthly to ensure that I am on track.
When did you start investing for retirement?
In my view I started too late. Although I had invested in other ways – such as unit trusts – I only started saving specifically for retirement (via retirement annuities) in my early 30s. I feel like I’ve been playing catch up since then.
Why did you only start saving for retirement in your 30s?
I bought my first house in my late 20s, and was very focused on paying off my bond as quickly as possible. Also, retirement saving wasn’t a priority for me because I didn’t have a family and I wasn’t sure if I’d still be in South Africa at retirement age. I thought paying off a bond was the most prudent way of saving, but then I realised the tax benefits of retirement annuities.
How do you prioritise between saving for retirement and other expenses?
I allocate a monthly amount towards a retirement annuity, but also put money in other investment vehicles such as unit trusts. This is because I believe in the philosophy of scarcity – I make sure that money goes out of my account towards investments instead of hanging around for me to spend it.
Did you get retirement advice or did you have to figure it out by yourself?
I had to figure it out by myself because my parents were never really financially aware. It’s been hard, but fun at the same time because I felt empowered by taking matters into my own hands and learning what to do. I also consulted financial advisers at various points over the last 10 years when I needed additional advice.
Would you do anything differently if you could go back in time?
I would start saving earlier via a retirement annuity because it would force me to save more money in a tax-efficient way.
Diana Jeffries* is a 67-year-old pensioner who lives in Pietermaritzburg, KwaZulu-Natal
When you were in your 20s and 30s, how did you approach saving for retirement?
I was a traditional 1970s housewife in that I didn’t work, but my husband and I both saved what we could, although I can’t remember our focus being specifically on saving for retirement.
However, we did buy our first house early on, and then throughout the years bought and sold property a number of times – selling for a profit in most instances – so that gave us some financial security, although I now realise that that wasn’t enough.
Looking back, how do you think you prepared for retirement from a financial perspective?
Not well. Life had some unexpected curveballs, such as my husband losing his business in his 40s. This meant that many of our financial plans went awry and we had to restart from a financial perspective at this period in our life.
However, we made a lucky property purchase and we were eventually able to subdivide and sell our land. The money from those sales became our retirement savings, but if we hadn’t had the land to sell I’m sure we would have been in trouble from a financial point of view. It was only after the sale of our land that we started investing our money via unit trusts.
Do you wish you’d done anything differently?
If I could start over, I'd make sure that I have a separate, untouchable form of savings – such as a retirement annuity - that could not be touched until I turn 60. That would ensure a guaranteed source of money for when we retired, despite the ups and downs in other areas of our life.
Do you have any advice for those younger than you?
I grew up with parents from the World War II generation, who wasted nothing and lived within their means. I think that living within your means – in other words, not spending more than you have – is probably one of the best things you can do for yourself from a financial point of view.
*Names have been changed.
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