Pension increases unlikely to beat inflation

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Take home pay continues to increase, but pension increases are slowing, with retirees facing below-inflation increases because investment returns are sluggish. According to the latest Bankserv/Africa Private Pension Index (BPPI), the average nominal annual increase in private pensions was 7.8 percent in February – to R5 992 per month –compared with 9.1 percent increase in take-home pay. Mike Schussler, chief economist at Economists.co.za, says it is unlikely that pension increases will continue to beat inflation, because equity market returns are barely out-performing inflation and interest rates are just above inflation. […]
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Early retirement puts your financial future at risk

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If you retire early – whether by choice or because you are forced to do so by your employer – your monthly pension could be considerably lower, creating financial hardship in later life. Retiring just 5 years earlier – at age 60 rather than 65 – after having contributed to a pension fund since the age of 20 could result in your pension being 27 percent lower. Retiring 10 years early could reduce your monthly pension by 47 percent. Pensions are significantly lower because, not only will you have saved […]
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What to do when a person dies

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When a relative or someone close to you dies, there are a number of steps you must follow Get a death certificate. A document stating the person has died is completed by the undertaker, funeral parlour or doctor. This is taken to the Department of Home Affairs, which issues a death certificate. The deceased estate must be reported to the Master’s Office. This is usually done by a person who has an interest in the estate, such as a beneficiary. The beneficiary appoints someone such as an attorney, accountant or […]
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Changing face of retirement

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Young people tend not to think about retirement – or if they do, they follow advice better suited to the reality of retirement in today’s world. But the path to retirement is changing, and by the time today’s 30-somethings retire, their realities will be quite different to those who retire today. Some of the reasons are: Self-employment is now more prevalent amongst young people Many younger people are self-employed and must make their own retirement plans without the benefit of an employer contributing to their retirement savings and providing benefits […]
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“Treasury wants you to retire better by default” by Laura du Preez

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Proposals aimed at nudging you to do the right thing and preserve your retirement savings if you leave your job and helping you to convert your savings to a pension at retirement, were released by National Treasury this week. The far-reaching proposals, contained in draft regulations under the Pension Funds Act, won’t remove your right to take your retirement savings in cash from an employer-sponsored fund if you leave your job, but will force you to think twice about doing so. This is because your fund will be obliged to […]
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Loneliness bad for elderly

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Elderly men and women with solitary lives suffer more age-related mental decline than those who enjoy lots of company. Research has shown that social isolation is more damaging than not exercising – and twice as harmful as obesity. The latest study, by Harvard Medical School in Boston, shows the effect of loneliness on the mind. Although the mind would be expected to slow down with age, the effect was accelerated by 20 percent in the loneliest people. Researcher Dr Nancy Donovan said: “Lonely people decline cognitively at a faster rate […]
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Retirement plans may fail you

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Traditionally, people work on the idea of saving a certain amount – such as 15 times their annual salary – to cover their needs in retirement. But these plans may be upset by factors that cannot be built into typical retirement savings calculations. According to an article by Laura du Preez in Personal Finance (6 June 2015), targeting a particular lump sum with the view to it sustaining your desired income in retirement may be a bad idea, especially if you assume that you will continue to enjoy high real […]
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Fulfilling retirement not only about money

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Although you should be concerned about your financial security in retirement, having sufficient money will not necessarily buy you happiness. According to John Anderson, head of research and product development at Alexander Forbes, it is important to prioritise your spending according to your needs and financial resources. A good way to achieve contentment and financial stability before and during retirement is to base your spending on Maslow’s hierarchy of needs. This is often portrayed as a pyramid with the largest, most fundamental levels of needs at the bottom and the […]
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Make the most of discounted bank rates

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Most banks offer special rates for people over the age of 55 or 60, which include reduced transactional fees and preferential interest rates on fixed deposits. But there are catches: lower or zero costs are mostly conditional on you maintaining a fairly substantial minimum balance in your account, or a substantial amount in a linked savings account. Another condition of avoiding high charges is that you make use of technology. Not all pensioners have substantial savings that they can use to maintain a high minimum balance. And many older pensioners […]
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Avoid these retirement risks

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Ken Russell, a financial adviser at Alexander Forbes, offers these insights into common financial risks facing us when we reach retirement age. [Source: Personal Finance in The Independent on Saturday, 21 March 2015] PRE-RETIREMENT RISKS The financial risks you face before you retire are: Waking up too late to the need to save. Unexpected life events. Divorce or illness can seriously affect your finances. Russell says that it can take 10 years to recover financially from a divorce. Forced early retirement. Most retirement funds plan on you retiring at age […]
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