It is a well-known fact that many retired people fear that they will become poor. In many instances this fear unfortunately becomes a reality.
Due to better living environment and sophisticated medical care, life expectancy has increased dramatically over the last few decades.
Pension and medical aid funds are being drained because of less young members contributing to these funds. HIV under young members worsen the scenario. The funds are further depleted by longlivity of older members, thus increasing their fund liabilities.
Take not of the following interesting facts:
Babies born in developed economies can have a life expectancey of 140 years. There are at this moment in time more people over 60 than children under 6 years on our planet.
From the above the concept of “retirement” as perceived today, will have to change drastically.
Retirement age of 65 was instated in Germany in 1881 when average life expectancy was only 45.
Persons retiring at age 65 starts consuming wealth instead of creating wealth whilst still in a position to do so. This is an insustainable model not to become part of this scenario is essential that people take not of the situation.
A few practical hints:
Be well-informed and take pro-active steps.
Stay economically active as long as possible – a hobby could be a source of extra income.
A single provision e.g. retirement fund cannot sustain a 30 year life expectancy often retirement at 65.
Keep on contributing towards a few retirement annuities so as to be able to stagger income streams at different stages.
Old age homes are becoming increasily quite expensive. Stay independent as long as possible. Plan for alternatives e.g. home care.
May people still regard retirement as doing nothing and being on holiday. Rather acquire a new skill. Retired people have lots of experience and expensive which could be put to good stead e.g. consulting, contract work, etc.
Change focus being an employee to rather come an employer. It is never to late for a new beginning or to realise a long-cherised dream. Focus on creating wealth and avoid poverty by staying economically active – thus making a meaningful contribution to society.
To assist you in your efforts and for more information on portfolio analysis and investment/retirement planning contact Elsabe Smith, a certified financial planner and a Fellow of the Internationally Affiliated Financial Planning Institute. Previously, for two years in succession, she was the top investment advisor in Sanlam, Gauteng North. She has also received the sought-after Golden Eagle reward from Sanlam for maintaining excellent performance and service levels. Via the Sanlam Glacier platform clients can access funds of Allan Gray, Investec, Coronation, and other asset managers.
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