or a retirement annuity in one ’ s own name .
2 . Adhere to the 15 %+ savings rule
Members who contributed above 15 % of their salary have a much better chance of achieving a pension that is around 70 % of their salary just before retirement . Encouragingly , a quarter of the members are contributing at this level and a small group of super savers – 4 % of provident and 2 % of pension fund members – are contributing 20 % or more .
“ It is quite common to hear people say I cannot afford to save . The reality is that if you are fortunate enough to have an income , the challenge is about figuring out how to balance between your current needs and those that are either unforeseen , like emergencies , as well as those that are foreseen but potentially may seem far off , such as retirement .”
“ Saving during your working years is about deferring some of your income and consumption , to a period when you will no longer be working . It is the careful management and spreading of your own income over your lifetime , not just consuming whatever you get today , on the same day .
“ Admittedly , no-one knows how long they might live or whether they will get to retirement but it ’ s about planning for the future , no matter how uncertain , so that you aren ’ t left vulnerable if you do enjoy a long life ,” said Davison . The first step to being able to afford to save is to curtail debt , he said . The same people who claim not to be able to save are often able to afford to pay instalments on credit cards , personal loans or vehicle finance .
“ Eliminating these debts should be accompanied by redirecting the loan repayment amounts to savings . In this way , the pain of paying interest is replaced by the benefit of earning interest , which can dramatically improve a person ’ s financial situation ,” noted Davison .
SA Real Estate Investor Magazine NOV 2022 169