Dealing with inflation in retirement in South Africa can be a challenging task. Inflation can erode the value of a retiree’s savings and reduce their purchasing power, making it difficult to maintain the same standard of living. Here are some tips on how to deal with inflation during retirement in South Africa:
1. Create a realistic budget: Creating a budget can help retirees track their expenses and avoid overspending. Many people see a budget as something restrictive, but it is probably the most empowering tool when used properly, bite the bullet and do the budget!
2. Invest according to your investment strategy: A mistake many retirees make is to invest in more conservative asset classes once in retirement. Before you retire you should know the real return (return after inflation) you need your invested funds to achieve in order for you to live your planned lifestyle. Retirement can last 40 years, often longer than your work career so beating inflation with your investments is essential.
3. Delay or ease into retirement: Many clients we work with battle with the transition from working full-time to full-time retirement. A slow transition into retirement can ease this transition and at the same time allow you to earn for a few years longer meaning that your retirement investments can continue to grow before you start to access them. If this is a possibility, consider it.
4. Settle debt: All your debt should be settled on retirement. Pay off the cars which may have been funded through your business and make sure all other accounts have a zero balance. Interest rates have doubled in the last 12 months which directly affects one’s cash flow, we have no control over what will happen in future so having no debt means one less thing to worry about.
5. Seek advice from a Certified financial planner: Use the services of a qualified financial planner to plan your retirement. This professional should not be advising only on how you invest but should understand who you are and what a successful retirement looks like to you. this planning should include your spouses’ input so that should something happen to you, they know the “plan” and have a relationship with your chosen Lifestyle financial planner.
Retirement is both exciting and daunting, doing it alone can be scary so find an LFP you like and trust and build the life you want. Plan the life you want to live!
Dirk Groeneveld, Certified Financial Planner
t. 083 261 9287