As you get older, saving money and paying off debt become top priorities. Do you worry about your retirement? You aren’t alone. Only five in 100 South Africans will have enough money to be financially independent in old age. Many pensioners – nearly a quarter of retired people - still have children to support, according to Sanlam. Statistics show that more than a third of pensioners use up their entire pension payout within two years of retiring. Saving for old age
Be careful of funeral policies More policies, less money
“People think that the more funeral policies they have, the more money they’ll get. But this isn’t necessarily the case. Most insurance companies will pay out less if you have other funeral policies. In some cases, they will only agree to pay out one policy,” warns Lyndwill Clarke from the Financial Services Board.
CHECK that your family will get what you expect they’ll get Being cheated
You also need to be careful of unscrupulous or dishonest insurers, as there are many of them around. “Funeral
cover is a big driver of non-bank and informal financial products. This means that there is a lot of scope for unscrupulous insurance brokers, and the most at risk are the lower income groups,” warns the debt management company DebtBusters.
CHECK that your policy is underwritten by a licensed financial services provider (FSP) Funerals are important events. But many South Africans over-invest in funeral policies, to the extent that other priorities in life are compromised.
CHECK that you can afford your funeral cover
A pension comparison R35 000/month salary working for 30 years R846 000 gratuity R19 120 pension p/m
A hospital manager earning R35 000 per month who retires at 60 after 30 years service will probably be in a secure position, for example, as she’ll get a gratuity (one‑off payment) of R846 000 (before tax) as well as R19 120 pension (before tax) each month.
R18 000 /month salary working for 9 years R582 000 gratuity No monthly pension
A nurse earning R18 000 a month
for nine years before retirement will only get a R582 000 gratuity (before tax) from the GEPF, and no annuity (no monthly pension). This means she will have to live off the gratuity amount until she dies, so investing that money in a retirement plan that pays her out a set amount every month would make good sense for this nurse.
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