‘Second career’ reality for many retirees

accreditation
(Shutterstock)
(Shutterstock)
Cape Town - Most South Africans are financially not ready to leave the world of work at the traditional retirement age of 60 or 65 and many embark on a "second career", according to the 2014 Sanlam Benchmark Survey.

This "second career" could mean either working longer in their current job or starting their own business.

“Of the 300 pensioners surveyed this year, one in five indicated that they supplement their retirement income with part-time work," said Kobus Hanekom, head of strategy, governance and compliance at Simeka Consultants and Actuaries.

"In most instances, this is out of pure financial necessity. People are living longer and it has therefore become much more expensive to retire."

The problem is that South Africans are currently compelled to retire and buy an annuity regardless of whether or not they intend to continue working.

"You then lose out on the benefits of compound interest that works in your favour over the last few years and have less time to save for a longer and more expensive retirement,” said Hanekom.

Changing world of work

The world of work is changing and tax laws need to "catch up" to enable phased retirement, in his view.

This will make it possible for individuals to continue working – either in their jobs or doing another type of work – and keep their money growing in a pension fund.

“This means that when you retire from your first career at age 60, you will be allowed to remain in the system and continue to contribute to a retirement fund during a second career," said Hanekom.

"This will allow you to increase your retirement savings, benefit from the applicable tax advantages and retire more comfortably at a later stage.”

He said delaying retirement by six years can double one’s capital upon retirement, while retiring six years earlier will leave you with half the capital to last an extended time period.

The retirement age of many corporate employers has, however, decreased and is now closer to 60 than 65.

There are many reasons why employers prefer an earlier retirement date, including the need to remain BEE compliant.

Hanekom encourages retirement fund members to take ownership of their own retirement planning with the assistance of a qualified financial adviser.

- Fin24

Consider yourself a savings hero? Or just have something on your mind? Add your voice to our Savings Issue:

* Write a guest post
* Share a personal story
* Ask the experts


We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can 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. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Rand - Dollar
17.67
-0.2%
Rand - Pound
20.21
+0.1%
Rand - Euro
17.61
+0.0%
Rand - Aus dollar
11.47
-0.0%
Rand - Yen
0.12
-0.2%
Gold
1,719.90
-0.4%
Silver
20.79
-1.3%
Palladium
2,300.96
-0.9%
Platinum
924.68
-1.0%
Brent Crude
91.80
+3.2%
Top 40
59,840
0.0%
All Share
66,313
0.0%
Resource 10
64,568
0.0%
Industrial 25
80,073
0.0%
Financial 15
14,053
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders