Do Not Outlive Retirement Savings

Last week we identified 5 major concerns that retirees share. Today we tackle the first one, outliving your retirement savings.

Outliving one’s savings is a major concern for many retirees, as they worry about running out of money during their golden years. With people living longer, it’s important for retirees to plan for the possibility of a longer retirement and take steps to prevent outliving their savings. Here are some solutions to prevent this concern:

1. Start saving early:

The earlier you start saving for retirement, the more time your money has to grow and the more you can save. Starting to save early also enables you to take advantage of compound interest, which can significantly increase the amount you have saved by the time you retire.

2. Be realistic about your retirement income:

It’s important to be realistic about how much money you will have available to you in retirement. This means estimating your income from pensions, and any other sources of income. Make sure that the amount you might draw from savings, be it annuities or discretionary investments, is sustainable into the future. It also means considering any changes in your income that may occur in the future, such as cost-of-living adjustments or healthcare costs.

3. Plan for unexpected expenses:

Even with the best budget in place, unexpected expenses can still arise. It’s important to plan for these by setting aside money in an emergency fund. This will provide you with a cushion to fall back on in case of unexpected expenses, such as medical bills or car repairs.

4. Do a proper cash flow analysis to understand for instance the benefits of working a bit longer:

Working longer can help you increase your savings and delay accessing your retirement savings which can help increase the amount of money you will receive each month or make sure that your savings last longer.

5. Review and adjust your retirement budget regularly:

Most of us hate drawing up a budget but it is the single most powerful thing you can do to take control of your finances. As your income or expenses change, your budget will need to be adjusted. Do this annually at least.

6. Seek professional advice:

A lifestyle financial planner can help you create a financial plan that considers your unique circumstances and lifestyle goals. A CFP professional can provide you with the information and guidance you need to make informed decisions about your savings, investments, and retirement income. You want someone who looks at you as well as your money.

Retirement is daunting for most no matter how well you prepare. Remember that retirement planning is a “verb” ie: it never stops. We can’t predict or control the markets but we have full control over our behaviour.

Dirk Groeneveld, Certified Financial Planner

t. 083 261 9287

e. dirk@clientcare.co.za

Client Care Lifestyle Financial Planning

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Previous Columns:

Ways For Retirees To Make Sure They Do Not Outlive Their Retirement Savings