MONEY
NAVIGATING THE ROUTE TO A BY STEPHEN KATZENELLENBOGEN, SENIOR EXECUTIVE AND PRIVATE WEALTH MANAGER AT NFB PRIVATE WEALTH MANAGEMENT
O
ur lives as we know them
uncertainty around the impact of
income while at the same time
have been overturned
COVID-19. However, before you
saving as much as you can.
in recent months as the
start panicking, what’s important
While professional advice is
COVID-19 pandemic takes root
to remember is that markets have
a good idea, it’s just as important
around the world. Markets globally
sold off before but over time they
that you spend time educating
have been hard hit, including in
recover.
yourself so that you know to ask
South Africa. Locally, the economy
When planning for your
the right questions and have
is estimated to be losing around
retirement, you should evaluate
a good idea of the available
R13bn a day during the lockdown.
how much money you need to
alternatives. Take your time
replace your current lifestyle. If
regarding the decisions you make
economy and provide both
the answer is that you don’t have
and make sure that all decisions
households and businesses some
enough money to retire, this is not
are based on good information,
relief, the South African Reserve
the time to bury your head in the
given that it’s going to be almost
Bank (SARB) has in recent weeks
sand like the proverbial ostrich
impossible to undo the choices
announced two significant rate
and hope the situation rectifies
you make now in a decade’s time.
cuts. While this is good news for
itself of its own accord.
In an effort to stimulate the
those with debt, it is not such good
The topic of frequent news
news for retirees dependent on
articles, the reality is that most
interest from savings, particularly
South Africans have not saved
as further rate cuts have been
sufficiently for their retirement.
mooted for later in the year. For
The South African Saving
both investors and retirees who
Institute (SASI) attributes this
have exited the market in recent
to a high level of domestic
weeks as a result of alarming
indebtedness, leaving little
volatility and utilised bank-deposit
disposable income over for the
accounts, these interest rate cuts
purposes of saving. Most people
are similarly concerning.
have a natural aversion to having
For those planning to retire
to ask their offspring for help, but
imminently, the recent market
what can you do to address the
declines don’t bode well for their
situation?
future plans. Even those who
If you have not put aside
have been saving for the last 35
sufficient savings for retirement
to 40 years and have seen their
and your retirement is imminent,
investments traditionally deliver
you have two choices: the first is to
a healthy return will have seen
cut your income needs to a point
their investments devalued when
where your retirement capital
compared to the beginning of the
can sustain the drawdowns; or
year. The reality is that the JSE,
secondly, you extend your career,
and probably most global markets
thus providing time to allow
too, are likely to continue a period
your capital to grow – or you do
of low returns as we ride out the
something to supplement your
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SILVER DIGEST // WINTER 2020
My advice at this point is to focus on what you can control. Avoid making any short-term,
