The retirement age in South Africa is between 60 and 65 years of age. The savings rate in South Africa is meagre. Most South Africans only start thinking about saving for retirement when it’s too late. The younger a person begins saving, the less one needs to worry about retirement as it draws closer.
Also, having a watertight Will in place is something most people don’t think of or leave until retirement as an afterthought. A Will is a cornerstone to all wealth preservation and inheritance claims.
Speaking of planning after retirement, here are five things you should know about it.
1. The law and the retirement age in South Africa
Non-government employees cannot be forced into retirement at any specific age unless the employment contract stipulates otherwise.
The good news is that some companies offer work after retirement. This work could be as a freelancer or consultant. Check with your employer if there are opportunities available like this before you retire. Even better would be to have this discussion, if not already done, before signing an employment contract.
2. Start planning for retirement long before it arrives
Life can be fleeting. When you wake up one morning and realise you have hit your retirement age in South Africa, you don’t want to be scrambling for something to do or the finances to do it.
Make sure to be saving as much as you can into a provident fund or retirement annuity. Don’t withdraw any of these funds before your retirement age; otherwise, there are severe tax implications.
3. Make sure your health is taken care of
When retirement arrives, medical aid may disappear. An employer won’t continue to fork out money for medical schemes. Discuss options with an expert and make sure the transition is seamless and covers all you need to stay healthy. Health risks hit an upward curve with age, so this needs to be planned and budgeted before it happens.
4. A Will is a cornerstone of any financial or retirement planning
Please, make sure that your Will is in place. Even long before you retire, you should have a Will, whether you feel you are wealthy or not, have enough assets or not or whether you have children or not.
In South Africa only 30% of citizens have a Will in place (2021). And most who do have a Will in place planned for it at the last minute. If you pass on without a Will, all of your assets become ‘intestate’.
Intestate Succession means that the government controls your wealth and decides how to manage what you have left behind. You don’t want to leave your family the burden of sorting this out. There are stories of families waiting up to 15 years to wind up an estate due to either an invalid Will or no Will in place. This process can cause more financial burden in paying legal fees and the emotional burden of not resting until the estate gets resolved.
Fortunately, there are products like SmartWill that make creating a Will seamless and comfortable as you can do it online from your couch. SmartWill ensures all of your assets are accounted for, kept safe and get into the hands of those you want to have them.
Also, if you or a friend are battling to wind up an estate, then Estate Plan can assist you in sorting this issue out. It is a tech-driven platform that pulls all the relevant information, including all stakeholders, together and begins to with the administrative magic to wind up estates, even those that are complex.
5. Retiring can be challenging if you are not emotionally prepared
Having a vision for retirement is paramount. Once the emotional high of retiring is over, it can be easy to feel a bit lost. There can be a season of disillusionment. What does one do with all the time that one used to work?
There may be feelings of boredom, loneliness and uselessness. If not expected and not dealt with properly, these feelings may lead to depression. If this happens, have a battle plan in place. Pursue a passion you couldn’t get to when you were working, do volunteer work and be sure to add some fun activities to your daily routine.