Saving for retirement at 45?

Saving for retirement at 45?

More than 70 percent of South Africans, particularly in their 20s and 30s, cash in their retirement savings when they change jobs, severely hampering their ability to retire financially independent. Then in their forties they begin to think about the future and realise they’ve made a substantial error in judgment.
According to a reliable source, that while starting as early as possible is vital, it’s still possible to make provision for your retirement starting at 45. "It’s not only necessary, it’s imperative," she says. But you’ll have to save harder, work for longer and invest wisely so that what savings you do have achieve the best possible returns.
Ultimately your retirement income will be a factor of how early you started saving, how much you’ve saved, the investment returns you’ve enjoyed and the amount lost through not preserving your pension or provident fund savings when you changed jobs. When you reach 45 you can only influence two factors: how much you contribute and the investment choices you make. It’s too late to think about starting early and the retirement money you cashed in between jobs is long gone.
How much you need ?

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Why invest offshore now?

Returns of developed market equities have continued to lag behind the returns of emerging market equities. Emerging markets, including South Africa, have enjoyed strong inflows of capital from abroad, supporting valuations on our stock markets and helping the rand to strengthen by nearly 25 percent versus the US dollar in 2009 and 2010. This strong rand has been one reason why inflation has remained subdued over the last year, as approximately one-third of the items in our inflation basket are imported.
For long-term saving to be successful, the value of your investments must keep pace with inflation, and preferably beat it over the long term. A strong rand tends to drive inflation down; a weakening rand typically leads to higher inflation. To be protected against higher inflation from a weak rand, it may help to be invested offshore as the value of your assets in rand terms should grow as the currency weakens.
We think there is a real risk that the rand may weaken from current levels, and therefore believe that foreign exposure is an appropriate addition to clients' portfolios.
What are the options?There are many options for investors offshore. Shares are an obvious place to start for people with a long time horizon. It is also important to consider other options when looking abroad. An interesting dynamic is the growing link, or correlation, between share prices globally and the value of emerging market currencies. This link can work against you if you are investing in offshore equities in order to enjoy the benefits of rand weakness

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Retirement Annuities

I would like to offer you more info on

A retirement annuity that offers payment flexibility and access to a wide range of underlying investment options, from as little as R250 per month.

Invest a regular monthly amount.

• Automatic access to over 200 funds, managed from a range of leading fund managers in SA.
• The flexibility to switch between over 200 investment funds, as often and whenever you like, at no cost.
• Consolidated reporting available on the performance of your investments.
• The more you invest, the lower your plan charges will become as the value of your investment grows.
• Benefit from tax advantages of investing via a retirement annuity tax wrapper.
• Flexibility to add or remove risk protection, as your individual circumstances change.
• The option to make lump sum and scheduled payments when investing in the Flexible Investment Plan.
• Skip up to one year’s worth of premiums over the premium payment term, with the Focussed Investment Plan.

If you would like a free Quote You can Contact me Here

Magda

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Why save for Retirement? …What is in it for me?

The choices we make today, will determine our lifestyle after retirement, so make sure that every decision is a good one. Make sure that every decision counts.

Most people think that their company pension fund will provide them with sufficient income at retirement- this, unfortunately may not be the case and by the time that they discover this, it is usually too late to do something about it.

The calculation of how much retirement savings you need is called a replacement ration, as the income from your savings need to replace your monthly salary when you are no longer working.

There is no one fits all solution, but most experts agree that if you want to retire comfortably, you will need retirement savings that will give you an income per month of about 75% of your final monthly salary.

Research has indicated that the average replacement ratio of South Africans is currently 28%

Some of the main reasons for this is that people do not save enough of their income on a monthly basis and withdraw their retirement savings when they change jobs.

If you would like to calculate your retirement you can access the retirement calculator

Every fortune starts with a rand.

Every success starts with a plan

Why save for Retirement? …What is in it for me?

 

Income tax savings on contributions

Retirement Annuity contributions are tax deductable up to a maximum of 15% on income ( Assuming no pension/provident fund. Ie.all income is non retirement funding)

No Tax on fund build-up

The build-up of the fund is taxed at 0% on interest and rental income and there is no tax on capita gains.

Protection against insolvency

Retirement Annuities are protected against claims from creditors, meaning business risks can be kept separate from personal investments.

Funds remain intact until retirement

Withdrawals can generally only be made from age 55, ensuring that funds cannot be used for any purpose other than providing a retirement income.

Tax savings after retirement

After retirement, you have a lifetime R 300,000 tax free, plus non- deductable contributions can be reduced by any tax free amounts you have not accessed before.

You can contact me direct for a free no obligation consultation

I would also like to offer you a Free E book - The Beginners Guide to Investments
You can download your copy here

You can also Complete a Inquiry form and I wil get back to you.

Magda

mbosman@oldmutualpfa.com

Tel: Direct 021 550 9357/ 021 550 9300
Cell: 0761304130
Fax: 0866361925
Skype: magdabosman1

http://mbosman.findanadvisor.co.za/

Retirement Planning A few Basic rules to remember

Retirement Planning

There are few basic rules you need to remember when making investments and planning for your golden years.

The global economic crisis had an upside in that it encouraged many South Africans to think about how to better manage their finances, start saving for the future and plan for retirement. The financial services industry has many savings and investments options and this has led consumers to feel confused about how to start saving for their retirement. Should one invest directly in the stock market, invest in a retirement annuity or unit trust. The key is to concentrate on the basics and to make sure you are getting some fundamentals right.

START EARLY

The average person has only 500 pay cheques to contribute to their retirement in one lifetime. The earlier a person starts, the better off they will be, as there are limited opportunities towards retirement.

KNOW YOUR RISK APPETITE
Before committing to any investment product, investors need to understand their risk profile. A willingness to possibly lose value in an investment, with the view that it will pay off, in the long run determines an investor’s risk profile. All investments are to subject different types of risk, which can affect the investments return. Most investors will know that although cash is very low risk, the returns earned from keeping cash are minimal as well. Bonds are affected by the risk that interest rates will increase and this decrease the value of the bond. Stocks are higher risk vehicle because they can be affected by events that are specific to a company or its industry. These risks make some investments more suitable for longer investments periods or shorter investment periods.

MAINTAIN REASONABLE RETURN EXPECTATIONS

One should review their portfolio every year. When developing your financial goals, you will typically decide how much you need, when you will need the money, how much you will earn on those savings. Those factors will determine how much you will need to save on an annual basis to reach your goals.

DIVERSIFY

Diversification is a defensive strategy- it protects the investments portfolio during market downturns and helps reduce volatility. It is important to diversify among and within investments categories. An investor’s portfolio should include a combination of some domestic and offshore equities, bonds and cash.

THINK LONG-TERM

Timing the market is a difficult strategy to accomplish successfully, since so many factors affect the market. Most people, including investments professionals, have difficulty timing the market with accuracy. Instead, concentrate on setting an investment programme that works in all market environments and stick with it in good and bad times.

TAXES

Taxes are probably a portfolio’s largest expense. The government has given some great tax benefits to encourage people to save for retirement. Use them! The compounding impact of tax-free returns on income and capital gains over 20 years can make a difference to a more comfortable retirement.

Original article The New Age by Loyiso Sibali

You can contact Magda 0761304130 or mbosman@oldmutualpfa.com

http://mbosman.findanadvisor.co.za/

Are you saving for Retirement?

• Are you saving for Retirement?
• Do you have a retirement Annuity?
• Do you know if it is enough?

Most people choose to ignore that retirement is getting nearer. Only 7% of our country will retire with a sufficient income, but with the rising of inflation it is extimated that around 4% will be independent. Are you one of the 96%?

Take a look at the following pictures

Are you destined to live like this? No really, .......take a look. This is  a man that choose not to invest in his retirement. Sadly this happens all the time. What are you planning to do about it?
Wait for old age to creap up on you.... or start with a plan!

We can offer you the solution

A retirement annuity that offers payment flexibility and access to a wide range of underlying investment options, from as little as R250 per month.

• Invest a regular monthly amount.
• Automatic access to over 200 funds, managed from a range of leading fund managers in SA.
• The flexibility to switch between over 200 investment funds, as often and whenever you like, at no cost.
• Consolidated reporting available on the performance of your investments.
• The more you invest, the lower your plan charges will become as the value of your investment grows.
• Benefit from tax advantages of investing via a retirement annuity tax wrapper.
• Flexibility to add or remove risk protection, as your individual circumstances change.
• The option to make lump sum and scheduled payments when investing in the Flexible Investment Plan.
• Skip up to one year’s worth of premiums over the premium payment term, with the Focussed Investment Plan

Now take a look at this picture... would'nt you feel at pease knowing that you are prepared for retirement.

To start your Retiremement or have a free re evaluation on your current planning that includes your current pension or provident funds.

You can contact Magda Bosman on 0761304130 or mbosman@oldmutualpfa.com

Times to take money matters seriously

Though making resolutions to improve your financial situation is a good thing to do at any time of the year, many people find it easier at the beginning of a new year.

Regardless of when you begin, the basics remain the same.

•  Get paid what you're worth and spend less than you earn

It sounds simplistic, but many people struggle with this first basic rule. Make sure you know what your job is worth by conducting an evaluation of your skills, productivity, job tasks, contribution to the company and the going rate, both inside and outside the company, for what you do.
Being underpaid even a thousand rands a year can have a significant cumulative effect over the course of your working life.
No matter how much or how little you're paid, you'll never get ahead if you spend more than you earn. Often, it's easier to spend less than it is to earn more and a little cost-cutting effort in a number of areas can result in big savings.

• Stick to a budget

How will you know where your money is going if you don't budget?
How will you set spending and saving goals if you don't know where your money is going? You need a budget whether you make thousands or hundreds of thousands of rand a year.

• Pay off credit card debt

Credit card debt is the number one obstacle to getting ahead financially. Those little pieces of plastic are so easy to use and it's so easy to forget that it's real money we're dealing with when we whip them out to pay for a purchase, large or small.
Despite our good resolves to pay the balance off quickly, the reality is that we often don't and we end up paying far more for things than we would have paid if we had used cash.

• Contribute to a retirement plan

If your employer has a retirement plan and you don't contribute to it, you're walking away from one of the best deals out there.
Ask your employer if they have a retirement or similar plan. If they do, sign up today. If you're already contributing, try to increase your contribution. If your employer doesn't offer a retirement plan, consider a retirement annuity very seriously.

• Have a savings plan

You've heard it so many times before: Pay yourself first. If you wait until you've met all your other financial obligations before seeing what's left over for saving, chances are you'll never have a healthy savings account or investments.
Resolve to set aside a minimum of 5 to 10percent of your salary for savings before you start paying your bills. Better yet, have money automatically deducted from your salary and deposited into a separate account.

• Invest

If you're contributing to a retirement plan and a savings account and you can still manage to put some money into other investments, all the better.

• Maximise your employment benefits

Employment benefits such as a retirement plan, flexible spending accounts, medical and dental insurance, etc are worth big bucks. Make sure you're maximising yours and taking advantage of the ones that can save you money by reducing taxes or out-of-pocket expenses.

• Review your insurance cover

Too many people are talked into paying too much for life and disability insurance, whether it's by adding these covers to car loans, buying whole-life insurance policies when term-life makes more sense or buying life insurance when you have no dependents.
On the other hand, it's important that you have enough insurance to protect your dependents and your income in the case of death or disability.

• Update your will

Seventy percent of South Africans don't have a will. If you have dependents, no matter how little or how much you own, you need a will.

• Keep good records

If you are one of the people who don't keep good records, you're probably not claiming all your allowable income tax deductions and credits.
Set up a system now and use it all year. It's much easier than scrambling to find everything at tax time, only to miss items that might have saved you money.

For More info on how to start saving contact Magda on mbosman@oldmutualpfa.com

http://financialadvicesa.blogspot.com/
http://mbosman.findanadvisor.co.za/

Original Aricle

http://www.businesslive.co.za/Feeds/sowetan/2011/01/18/times-to-take-money-matters-seriously

Ten reasons to invest in a retirement annuity

Retirement annuities (RAs) remain a popular investment vehicle with many South Africans for good reason.

"A retirement annuity is a long-term savings vehicle aimed primarily at people providing for their retirement. To prevent people from relying on the government to provide for them in their old age, there are legal restrictions on withdrawing funds from RAs," says Rowan Burger, the head of investment strategy at Liberty Retail SA.

"But there are also tax advantages to offset the lack of access to funds.
"Tax benefits are just one of the ten reasons that you should consider a retirement annuity," he adds.

1. Preparing for retirement
An RA helps you to build up capital during your working years so that you have enough income to enjoy the same standard of living when you retire.

2. Ensuring sufficient savings
The rule of thumb is that, if you save 15% of your salary over 35 years, you will receive 75% of your salary as a pension, given reasonable returns.
The problem is that your pensionable salary (the amount that your 15% pension contributions are calculated on) is usually about only 70% of your total salary benefits, which include, for example, a bonus, car allowance, medical aid scheme and other benefits. This means that you could retire on 75% of 70% of your salary," Burger says.
"It is important to save for these 'extras' as they do help us meet our current living expenses," he adds.
For example: if your monthly package is 20,000 rand, you would need to retire on the equivalent of 15,000 rand (75%). But your pensionable salary is significantly less at 10,500 rand (75% times 20,000 rand times 70%).
By investing 15% of your non-pensionable income into an RA you can make up the savings gap. A starting point is to always invest 15% of your bonus tax-free into an RA.

3. Tax benefits
You can invest up to 15% of your total income (less any amount that may be used for other pension-fund contributions) tax-free. Not only can you invest with before-tax money, but you do not have to pay capital gains tax or income tax on your retirement investment.
"Your investment growth will be higher over the long term as the growth remains in the policy and will usually offer you a better after-tax return than other types of saving," says Burger.
When you retire, you can take one-third of your investment as a lump sum. Of this, the first 300,000 rand is tax-free, with a favourable tax rate for higher amounts. The remaining two-thirds of the retirement annuity is invested in an annuity to provide you with income during your retirement.

4. The power of compound growth
Because you are saving over a long period, your money starts to work for you as you earn interest on the interest. If you save consistently over 30 years, less than 35 cents of each rand of income you receive will come from the contribution you paid in. The balance will come from the growth earned on your contributions and savings in retirement.

5. Disciplined savings
You do not have access to your retirement annuity savings until the age of 55. This may sound like a disadvantage, but it removes the temptation to dip into or deplete your savings while you are working.
" A 25-year old needs about 15% of his/her salary through their working lifetime to secure an adequate pension. If they cashed in their savings at 35, they would need to save 25% to get to the same benefit. Starting from a zero base at 45 requires an incredible 47%! The only remedy here would be to retire later," Burger adds.

6. Long-term growth
As markets fluctuate during different economic cycles, your consistent contributions will average out this variability. You also draw your pension over a (hopefully) prolonged period. Therefore, what happens in a turbulent investment market is of less concern to you. The average investment manager has delivered returns that are 11% above inflation over the past five years, despite the recent global economic crisis.

7. Supporting your dependants
If your dependants are left to cope without you, your retirement annuity can provide a source of income for those you leave behind, especially if you buy death cover on your policy. The cash benefit from an RA falls outside your estate, so if you die and are insolvent, your benefit is paid to your family rather than your creditors.

8. Room to grow your savings
While pension funds generally require a contribution that is a fixed percentage of your salary, RAs offer more flexibility. Many people recognise the need to save but struggle in the short term to meet financial obligations.
"A retirement annuity allows you to slowly increase your contributions over time.
"For example, you could take 3% from each of your next five years' salary increases to get to the full 15% contribution. You can also invest a portion of your bonus each year as a lump-sum contribution" Burger notes.

9. Diversified portfolio
You have access to different asset classes in an RA. You can invest 20% of your savings offshore without needing SA Reserve Bank clearance. You can also invest in other types of portfolios through your RA, such as direct property, private equity and fund of funds.

10. Freedom of choice
With many RAs you can choose your underlying investment, giving you some flexibility in how your contributions are invested and therefore how they grow

For more info  on how to get a sound retiremenent plan contact Magda on mbosman@oldmutualpfa.com

http://financialadvicesa.blogspot.com/
http://mbosman.findanadvisor.co.za/


ORIGINAL ARICLE

http://www.businesslive.co.za/Feeds/inet/2011/02/03/ten-reasons-to-invest-in-a-retirement-annuity

What is Disability Cover and Why do I need it?

Disability Cover

Disability cover through an insurance product will pay out either a lump sum or a regular income in the event of you becvoming disabled and cannot work.

Functional impairment

This relates to the dailt task or activities that an average person should be able to perform in order to work

Physical Impairment

This relates to the clients loss of use of a body part or function

Disability cover is important as it can pay you a lumpsum or monthly income in event of getting disabled.
For more info you can contact Magda mbosman@oldmutualpfa.com

What is Death Cover and Why do I Need It?

Life Cover/ Assurance provides Financial protection for your family or assets in event of death

How does it Work?

You will pay a regular premium  in exchange for the insurance company taking the risk of paying out an agreed sum of money in the event of your death.

Money can only be accessed once a claim occurs.

Life cover is normally needed to protect your assets such a a house and provide money for your dependents.

For more info on how to obtain life cover you can contact Magda mbosman@oldmutualpfa.com

When should I ask the advice from a Financial adviser?

Life stages and Financial planning

Single and starting out

When staring out the following needs might be your priority.

• Buying your first car
• Moving into your first apartment
• Going on holiday

You should consider expected events such as disability and illness.
You do not want to be a burden to your parents should this happen.

Single and established

In this stage you might be thinking of getting married, The question here is.. Do I have a financial plan and is it up to date?

Life cover and disability cover is now getting important.
This is also the stage where you should start thinking of retirement.

Married

The joining of  two lives is joyous. it is also nerve wrecking. There are a number of adjustments couples have to make when thinking and planning of two.

In this stage you may need financial protection as spouses now depend on each other for support.

In merging 2 households and perhaps 2 careers, there are are choices couples may need to make. These incomes may be needed to be protected against unexpected death, disability or illness.

Family Life

A family's financial needs  will grow and change over time. You may need steps to manage finances and protect your assets and lifestyle against changes in life or health.

Children are the future., We need to plan for their future and protect it.

Education costs become very important for primary,secondary and tertiary levels. The most tax and cost effective method of saving for these expenses need to be explored.

Divorced

Not all happy couples live happily ever after. Some marriages fail.  Divorce is unfortunately very real for many people. Couples face the difficult task of separating emotionally and financially.
It is time to consider your financial situation and put a plan in place to take care of your needs. The joint financial plan now has to be separated.

Your main concerns might be the impact of disability and ill health.

Who will look after you?

If you were to die, what about the maintenance payments?

Protection benefits needs to be revisited.
Retirement and savings plans needs to be revised in the light of the divorce settlement.

Deep in Debt

Clients who are deep in debt desperately need the assistance of a Financial Adviser
A appropriate debt consolidation product needs to be considered.

Empty nest

At this stage the children have left home. Suddenly there are extra money due to reduced living expenses
Some investments may be paying out. This is the stage that you needs a Financial Adviser

Retirement planning becomes an urgent issue. this is the last chance you will get to make up for the gaps in your retirement plan.

Retirement

The challenge here is to manage your assets so that they last as long as your expected lifespan.

Life Assurance still plays an important role.

Investing funds to generate an income in the most tax efficient way is critical.

Estate planning and finding the best solutions to avoid paying unnecessary estate duty will prevent the unwanted sale of assets that are earmarked for the clients heirs.

If you would like to speak to a Financial Adviser about your life plan contact Magda mbosman@oldmutualpfa.com

What are the first questions you should ask yourself when planning your finances?

Answer these questions to establish in which area your Financial planning is lacking

• Do I have a will that is current?
• Will I have enough capital and income if I was unable to work?
• If I was faced with a sudden emergency, will I be able to raise cash on short notice?
• Am I a member of a medical scheme?
• Are my assets protected against fire,theft or loss?
• Have I created a savings plan to cover education or any other savings need?
• Am I considering consolidating or paying of  debt to bring down the cost of debt?

Once answered, rank the most important ones

If you need assistance in solving these questions, you can contact Magda on mbosman@oldmutualpfa.com

The Role of A Financial Adviser

The role of the Financial adviser is a Practicing Professional who helps Clients with proper Financial Planning which includes:

• Risk management
• Cash flow Management
• Investment Management
• Education Planning
• Tax Planning
• Estate planning

Financial Advisers assist clients to find direction and meaning to their financial decisions.

Building a balanced financial portfolio is about long term wealth creation and having clarity around what their clients want out of life.

Financial advisers provide a face to face advice on personal financial planning to their clients

The process involves a 6 step planning action:

• Setting up of a personal meeting
• Gathering information
• Analyse Information
• Prepare and recommend solutions
• Implement solutions
• Review and Monitor

To arrange a free Consultation you can contact Magda at mbosman@oldmutualpfa.com