Five important career moves to ensure a comfortable retirement

“Every day in the investment industry, we deal with people in different life stages and with vastly different views on retirement,”  says 10X Investments’ Senior Investment Consultant Andre Tuck. 

“It’s great to see how seriously some people take their retirement planning, but also alarming that the majority of South Africans still do not have an adequate retirement plan in place. Especially since it really isn’t actually that complicated.” Below, we’ve used Andre’s many years of experience in the investment industry to summarise five key decisions that can drastically affect your ability to retire comfortably.

Did you know that you can speak directly to Andre about your retirement planning? Simply get in touch. There are no call centres at 10X, just experienced professionals ready to help. 

Start saving early

This simple refrain cannot be emphasised enough. When you start out in the working world, make sure you make adequate contributions to your employer pension or provident fund, or to a low-cost retirement annuity if your employer does not have a compulsory retirement fund. The golden rule here is to make a contribution of at least 15% of your gross salary over a 40-year period of employment, in order to retire comfortably. Doing this, you will benefit from the tax break (within limits) that SARS provides and ensure you do not become a burden to your children or extended family.

Don’t cash out when changing jobs

Changing jobs provides some access to previously untouchable pension or provident savings - but you cash out at your peril. You don’t only lose access to that sum at a later stage - you also lose the compound interest you would have earned on it over the years. It’s better in the long term to preserve the full value of your pension or provident fund in a preservation fund in order to grow it tax-efficiently until you retire at a future date. Stick to this rule every time you change jobs, and your future self will thank you for securing an independent retirement. The wonder of compounding will ensure that the capital value will grow in an underlying, well-balanced portfolio to give you the best chance of outperforming inflation over time.

Check your investment value at least twice a year

This is where many employees with company pension or provident funds make a crucial mistake: they leave it to their employers to ‘take care’ of their individual retirement plans and seldom check the relevant member portal to see how they are progressing in terms of retirement saving. Many times, employees have no idea if they are even making a solid 15% contribution, and no idea what their monthly contributions are actually invested in (i.e. the underlying fund or portfolio). As importantly, they seldom look at the fees they are paying, either in a company fund or individual investment - because if the net returns aren’t outperforming inflation, they’re actually getting poorer. 

Have you been feeling like your investments are too costly or that they could do more for you? Get a free comparison report from 10X Investments or make use of our Effective Annual Cost calculator, and set yourself up for the retirement you deserve, today. 

Foster a ‘retirement plan’ mindset throughout your career 

It is often pithily repeated that failing to plan is planning to fail. But cliches always contain some truth. The problem is that many people view retirement as some far off thing to worry about much later on, and then they put their head in the sand and hope for the best. But hope is not a sound investment strategy. To plan and be diligent in your efforts to save will lead to a much better outcome. Start today and draft the pan, write it down and hold yourself accountable to that plan. And if you need help, just get in touch.

Delay the retirement date if you have not saved enough

For the average employee, the days of retiring early are long gone (mostly due to inadequate retirement savings). So plan to keep earning for as long as you can - even if it’s just a small side hustle. This will have a direct impact on your retirement: you’ll contribute more money, give compound interest a longer time to work for you, and only start to draw income from your investments later. Many people realise too late that they may spend a long time in retirement - possibly even decades. If you want a better chance of sustaining your lifestyle, having some sort of earned income for as long as possible takes the pressure off of your investments and greatly improves your shot at a comfortable and stress-free retirement.