Tips and Tricks for retirement planning

the growth of my pension and RA has not been great over the last year, with below avg growth, so I'm pushing every cent I have into my bonds (avg rate of 9.8%).

This gives me a 'guaranteed' return of 9.8% (although returns are in fact savings). These funds will be transfered to my RA end of Feb to maximise my 27.5% (with a guaranteed return of 41% on these contributions)

Once my shares and other investment starts giving consistent growth above my bond rates, I will move my cash into them.

Until such time, with market volatility, at least I'm guaranteed returns with this approach
 
mountainboy said:
the growth of my pension and RA has not been great over the last year, with below avg growth, so I'm pushing every cent I have into my bonds (avg rate of 9.8%).

This gives me a 'guaranteed' return of 9.8% (although returns are in fact savings). These funds will be transfered to my RA end of Feb to maximise my 27.5% (with a guaranteed return of 41% on these contributions)

Once my shares and other investment starts giving consistent growth above my bond rates, I will move my cash into them.

Until such time, with market volatility, at least I'm guaranteed returns with this approach
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What are bonds? Where can I get it? Currently I'm just using a 32 day deposit account for those savings, but if I can get something that gives me more bang for my buck, why not! Are you with FNB?
 
halfmoonforever said:
I read somewhere a yearly lump sum contribution does better than smaller/monthly ones. So my RA will contribute whatever I put in my 32 day deposit savings 1 month before financial year is done.

Is this fine? Currently automatically pushing funds into my savings account to do this next year feb
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What you read is that it might be better to put in a lumpsum immediately rather than phasing it in.

How you are doing it is the opposite, if your investment contribution is done monthly, you might (investing in equity after all, so its a might) have 12 months growth on that 1st contribution, 11 month on the second one and so forth. Now you just have the growth on only the last months contribution. Just saying.
 
halfmoonforever said:
What are bonds? Where can I get it? Currently I'm just using a 32 day deposit account for those savings, but if I can get something that gives me more bang for my buck, why not! Are you with FNB?
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The bond he is talking about is his homeloan (with an access facility), because his home is bonded to the homeloan provider.
 
supersunbird said:
What you read is that it might be better to put in a lumpsum immediately rather than phasing it in.

How you are doing it is the opposite, if your investment contribution is done monthly, you might (investing in equity after all, so its a might) have 12 months growth on that 1st contribution, 11 month on the second one and so forth. Now you just have the growth on only the last months contribution. Just saying.
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the approach of one payment at the end of the year vs multiple payment over that year is to protect yourself against possible market volatility ie while you pay monthly, market might fall , taking down any contributions you would have made up to that period. One lumpsum at the end and you might have avoided some volatility during that year. But whose to say that after you make the once off annual payment, market wont fall immediately after

but as stated, you then lose the impact of funds starting work for you from day 1 of the contribution, rather than only working at the end of that year once the lumpsum has been paid

me - I'll pay monthly and have my funds work from day 1
 
Well you not only want to retire debt-free, you need to have enough to remain debt-free. Here are a few things I've seen with my gran who retired 27yrs ago debt- and mortgage-free:

Medical planning. For e.g. your employer's contribution to your medical plan could fall away on retirement so you may need to switch to a cheaper plan - which could mean a greater shortfall on cover. The later you join a medical aid, the higher the premiums will be. You need to have savings for medical aid shortfalls. Few medical practitioners seem to charge tariff any more.

Frail care for my gran costs R17 000 a month. Her pension is 8k - which is pretty good considering she is 92 yrs old but not good as medical costs, aged-care soar.

Someone mentioned cars - banks might not finance you for a vehicle once you retire. So you may have to keep your car for a long time & bucks for all the maintenance that goes with it

Then there's home maintenance, replacing appliances etc.

Ideally your nett pension should continue allowing for savings as well as living expenses, not just living expenses. Medical, home maintenance, transport can put a whammy on the most careful retirement planning
 
julietted said:
Well you not only want to retire debt-free, you need to have enough to remain debt-free. Here are a few things I've seen with my gran who retired 27yrs ago debt- and mortgage-free:

Medical planning. For e.g. your employer's contribution to your medical plan could fall away on retirement so you may need to switch to a cheaper plan - which could mean a greater shortfall on cover. The later you join a medical aid, the higher the premiums will be. You need to have savings for medical aid shortfalls. Few medical practitioners seem to charge tariff any more.

Frail care for my gran costs R17 000 a month. Her pension is 8k - which is pretty good considering she is 92 yrs old but not good as medical costs, aged-care soar.

Someone mentioned cars - banks might not finance you for a vehicle once you retire. So you may have to keep your car for a long time & bucks for all the maintenance that goes with it

Then there's home maintenance, replacing appliances etc.

Ideally your nett pension should continue allowing for savings as well as living expenses, not just living expenses. Medical, home maintenance, transport can put a whammy on the most careful retirement planning
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Great post. The frail care in particular is challenging. People think as far as retirement home maybe...but after that?
 
mountainboy said:
the approach of one payment at the end of the year vs multiple payment over that year is to protect yourself against possible market volatility ie while you pay monthly, market might fall , taking down any contributions you would have made up to that period. One lumpsum at the end and you might have avoided some volatility during that year. But whose to say that after you make the once off annual payment, market wont fall immediately after

but as stated, you then lose the impact of funds starting work for you from day 1 of the contribution, rather than only working at the end of that year once the lumpsum has been paid

me - I'll pay monthly and have my funds work from day 1
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Never try to time the market. Time IN the market is more important.

Unless you have some insider knowledge and you know 100% where things are heading, it's foolish.

Rather accept that things are going to go up and down and you don't know. When things are down relative to your existing investments or the existing trend of the market, then maybe invest more, if you can.

Remember that dividends works for you, even when the market is down.

“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” - Warren Buffet
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julietted said:
Well you not only want to retire debt-free, you need to have enough to remain debt-free. Here are a few things I've seen with my gran who retired 27yrs ago debt- and mortgage-free:

Medical planning. For e.g. your employer's contribution to your medical plan could fall away on retirement so you may need to switch to a cheaper plan - which could mean a greater shortfall on cover. The later you join a medical aid, the higher the premiums will be. You need to have savings for medical aid shortfalls. Few medical practitioners seem to charge tariff any more.

Frail care for my gran costs R17 000 a month. Her pension is 8k - which is pretty good considering she is 92 yrs old but not good as medical costs, aged-care soar.

Someone mentioned cars - banks might not finance you for a vehicle once you retire. So you may have to keep your car for a long time & bucks for all the maintenance that goes with it

Then there's home maintenance, replacing appliances etc.

Ideally your nett pension should continue allowing for savings as well as living expenses, not just living expenses. Medical, home maintenance, transport can put a whammy on the most careful retirement planning
Click to expand...

I reached my early retirement target at 41 but will continue working until 50 due to one major benefit. At 50 my employer will pay 70% towards my medical aid for my family until we die ( my daughter gets kicked out when she turns 26 tho). I reckom Swambo and I could live for another 40-50 years after retirement so its not a perk to be taken lightly

In the mean time I have another 8 years to settle all debt and grow my capital
 
julietted said:
Well you not only want to retire debt-free, you need to have enough to remain debt-free. Here are a few things I've seen with my gran who retired 27yrs ago debt- and mortgage-free:

Medical planning. For e.g. your employer's contribution to your medical plan could fall away on retirement so you may need to switch to a cheaper plan - which could mean a greater shortfall on cover. The later you join a medical aid, the higher the premiums will be. You need to have savings for medical aid shortfalls. Few medical practitioners seem to charge tariff any more.

Frail care for my gran costs R17 000 a month. Her pension is 8k - which is pretty good considering she is 92 yrs old but not good as medical costs, aged-care soar.

Someone mentioned cars - banks might not finance you for a vehicle once you retire. So you may have to keep your car for a long time & bucks for all the maintenance that goes with it

Then there's home maintenance, replacing appliances etc.

Ideally your nett pension should continue allowing for savings as well as living expenses, not just living expenses. Medical, home maintenance, transport can put a whammy on the most careful retirement planning
Click to expand...

I reached my early retirement target at 41 but will continue working until 50 due to one major benefit. At 50 my employer will pay 70% towards my medical aid for my family until we die ( my daughter gets kicked out when she turns 26 tho). I reckom Swambo and I could live for another 40-50 years after retirement so its not a perk to be taken lightly

In the mean time I have another 8 years to settle all debt and grow my capital
 
mountainboy said:
I reached my early retirement target at 41 but will continue working until 50 due to one major benefit. At 50 my employer will pay 70% towards my medical aid for my family until we die ( my daughter gets kicked out when she turns 26 tho). I reckom Swambo and I could live for another 40-50 years after retirement so its not a perk to be taken lightly

In the mean time I have another 8 years to settle all debt and grow my capital
Click to expand...

Out of interest what rand value did you set for your early retirement target?
 
mountainboy said:
I reached my early retirement target at 41 but will continue working until 50 due to one major benefit. At 50 my employer will pay 70% towards my medical aid for my family until we die ( my daughter gets kicked out when she turns 26 tho). I reckom Swambo and I could live for another 40-50 years after retirement so its not a perk to be taken lightly

In the mean time I have another 8 years to settle all debt and grow my capital
Click to expand...

You reached your retirement target already yet have debt? Interesting...
 
jsheed_sa said:
Out of interest what rand value did you set for your early retirement target?
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R25k per month was my target. I currently live on less but I am not the only household income

As for debt, I'm currently in 2 minds if I should pay off all debt as I still have about R2mil outstanding on investment properties which has way more equity than debt.

I am not squarely in the camp of absolute no debt when you retire since debt can a useful tool. But since I cannot find any investment that guarentees higher returns than my bond rates at present, I'm pumping all spare cash into my bonds
 
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If you don't save for your pension, NO ONE ELSE WILL!
If you think your company pension will be enough - think again!
An RA is the finest form of pension savings - especially when you can legally divert income tax due to SARS - into you plan.
Link an RA to unit trusts and you have the finest pension investment around!
 
pjp said:
If you don't save for your pension, NO ONE ELSE WILL!
If you think your company pension will be enough - think again!
An RA is the finest form of pension savings - especially when you can legally divert income tax due to SARS - into you plan.
Link an RA to unit trusts and you have the finest pension investment around!
Click to expand...

are you a PFA looking for business?
 
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