The last two years have brought about a crisis for many pensioners. Some have braved the storm and others have panicked and made poor choices with their investments. We look at some of the dos and don’ts when it comes to a crisis.
Every day we are bombarded with financial risks and demands resulting in a variety of crises, from economic impacts like record high petrol prices to potentially life-threatening diseases such as the current Covid-19 pandemic. With volatile investment markets, expectations of increased taxes and possibly less income in the near future, pensioners are at serious risk.
However, there are many rules that everyone should follow whenever there is a financial crisis, even with a pensioner’s limited ability to later correct a poor decision. It is always best to take action straight away and not wait for the crisis to subside.
Most people who are on the cusp of retirement will often find that they have not saved enough while earning a salary. In order to retire with 75% of your last salary, you need to contribute 17% of your salary annually for 40 years. Chances are that you are already short of capital or suspect you will be in the future. Here are some rules to improve your savings, especially in times of crisis.
Act immediately. Don’t wait until disaster strikes. If possible, be proactive and secure your financial future now. Plan for two budgets where one is to see what you spend in a year and one that extends into the future. The two budgets should cover both income and anticipated expenses, considering inflation rates, healthcare bills and transport expenses.
Try to avoid reducing your medical aid option or cancelling your medical aid. Retirement is generally the time when the greatest demands are likely to be for health cover and using this saving to free up money for living expenses could end up being very costly.
Financial success starts with good saving habits. Our Financial Experts have been unpacking and providing practical advice on the best ways to preserve YOUR financial freedom. Contact our Financial Advisors to ensure that you are receiving Shariah-Compliant Finance advice.
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Source: (Moneyweb, 2022)