MyMoney Online, Personal Finance with Warren Ingram

3 risks to your retirement savings (and how to mitigate each of them)

Only five out of 100 South Africans who are retirement fund members can retire comfortably.

In other words; only 5% of South Africans who are actively saving towards retirement will do so successfully.

The Money Show’s Bruce Whitfield asked Galileo Capital Personal Financial Advisor Warren Ingram to discuss three risks to your retirement plans, and how to mitigate them.

The risk of living longer than you planned.

Living longer than you planned for isn't great if you don’t have enough savings.

Cost of living increases speed up as you get older.

Medical costs can be a nightmare.

It’s best to plan for a life far longer than you expect (e.g. prepare to live until 100).

You should also consider working for longer than you originally planned.

The risk of becoming complacent while working.

Many people mindlessly save each month into their company pension fund, and that’s it.

They don’t look at their asset allocation (say what?) or calculate if they’re saving enough.

Do you increase these contributions each year when you receive a salary adjustment?

You need to have a game plan and set goals for your family.

At what age would you like to be financially free?

What age will you become debt free?

What happens once you have retired?

Have you invested your retirement funds correctly?

Are you drawing a sustainable income?

The risk of ignoring your emotions.

People base most of the critical decisions they have to make when thinking about retirement on emotions.

How will you react when you are living off your investments, and the market has been moving sideways for nearly five years?

Your risk tolerance plays a vital role.

So many investors damage their wealth by making emotional decisions (e.g. panicking and selling out, thereby “realising” what could’ve been a temporary loss).

To avoid this fate; have a game plan, and stick to it.

For more detail listen to the interview in the audio below.

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