Nine essentials of a sound financial plan #FinancialPlanningMonth

1. Retiring with confidence starts early in your life.
Retiring with confidence means starting to save as early as your first salary – even if you only contribute to your company’s retirement fund or a retirement annuity fund at that stage. The key to future prosperity is to build on this foundation as your income increases.

2. Plan your retirement around your lifestyle and financial circumstances.
There are many factors to consider when you approach retirement, including:

• How will your life and financial situation change when you stop working?
• What debts do you have that need to be settled?
• How many adult dependants rely on you financially?

3. Know how much life and funeral cover you have.
Have you considered what will happen if you pass away? You need to be sure that your debts will be settled, and that your children’s education will be taken care of. Life insurance and funeral cover form an important part of your overall financial plan.

4. Consider critical illness, trauma or disability cover.
Life is uncertain and can change quickly. Are you covered for critical illness or events that may cause disability? Most South Africans have disability cover as part of their life insurance with their company, simply because it is more cost-effective than other categories of cover.

5. Be prepared for retrenchment.
There is no such thing as job security or guaranteed employment in today’s workplace. Almost two million South Africans lost their jobs during the pandemic. Would you be able to protect your income if you lost your job? Income protection solutions offered by life companies also play a vital role in your overall financial portfolio.

6. Don’t be tempted to spend your retirement savings.
When leaving a job, either when you resign or are retrenched, you may be tempted to cash in your retirement savings to cover expenses and debts, despite the tax liability incurred. Also, accessing part of your retirement savings will become easier when the new two-pot retirement system comes into effect. Remember, your retirement savings are yours to keep when you retire. Spending the money now could mean that you won’t have enough saved to live on when you eventually retire.

7. Save for something.
We all have goals or dreams we want to accomplish, and most of them require money – for example, an overseas holiday, a new car or your first home, or you may want to save for your child’s education.

8. Remember increasing medical costs.
Medical insurance is important during your working years, and critical in retirement, as this is the time when your personal medical costs are most likely to increase. If your employer currently subsidises your medical aid contributions, your budget will need to accommodate the full premium when you retire.

9. Don’t neglect your paperwork.
Save yourself and your loved ones any unnecessary hassles by having your policies, will and personal documentation updated regularly. Information to be kept up to date includes contact and beneficiary details.

Glacier Financial Solutions (Pty) Ltd is a licensed financial services provider.

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