In May, on the 1st, we celebrated Worker’s Day, a very important milestone in any calendar as it is a day we honour those who were taken very much for granted for a long time. It is celebrated worldwide in fact and known elsewhere also as May Day or Labour Day due to the efforts of Labour unions to achieve equal employment standards for all.

We like to think that today we have a more equitable working situation and whether you are a blue or white-collar worker we are all respected for what we do. We certainly share a common goal and a dream to be financially independent and hopefully no longer working when we reach a certain age. So, how often do you ask yourself the question ‘’Do I still want to be working after 65?’’

Some plan to retire much sooner than that and others are happy to be employed for longer, but it’s doubtful that anyone wants to know that they will have to work after that age due to lack of funds. This is why a good retirement plan is essential from day one – the day you first become a worker!

A few basic rules can assist you with this, and you may have heard them before, but they are the foundation of ensuring you can plan to retire at the age that you prefer…

Start early!

From the day you start working, it is essential to begin a wealth creation mindset, which includes saving and using these savings as investments to grow your wealth. The power of compound interest is staggering and those who offer pension plan schemes utilise this expertly to improve your ultimate pension payout.

If you are employed, ensure you have a pension plan in place and if you don’t, or you chose to go the entrepreneurial route, then speak to a Financial Advisor (something else you should start early) about investing in a good pension plan.

Use tax-saving pension investments

If you are one of those who need to set up your own pension, then take advantage of the benefits offered by SARS regarding tax-efficient pension investments. The best of these is Retirement Annuities (RAs) which enable you to use a substantial portion of your salary (or earnings), which you would be paying tax on anyway, as a monthly contribution to the fund and these funds tend to earn great interest too!

It’s a no-brainer as you are saving on tax to gain wealth for your retirement years at a good rate of growth! You are only permitted to draw on it at 55, so it’s a commitment to your future too.

Don’t cash in too soon!

On that point, a critical mistake that many make when faced with a situation where they can draw on their pensions early, like the change of employment or when a pension reaches maturity at under 65, is to opt to cash it in and use the money for something else.

It’s important to realise that when you get to the last few years of an investment the interest earned from the increased capital increases exponentially and a few more years can greatly improve your payout.

Ensure your investments are outstripping inflation

The problem with most pension savings is that people get to retirement age and find that the payout is woefully short of what they will need to comfortably live on at the retirement age they choose. It’s generally too late to do anything to remedy this dire situation at this point!

This is why the input of a Hereford Group Financial Advisor is necessary all throughout your wealth creation journey. As professionals, we can continually gauge if your investments are aligned with your aspirations and your desired retirement age and goals.

If you don’t still want to be working after 65 – or any age for that matter, then start talking to us today and let us ensure that all that hard work has really paid off