MONEY
invested in a balanced fund
staying exposed to equity and
retirement pot further into your
throughout your life. We can see
listed property can dramatically
retired years. Of course, you will
that your investment value of
reduce the probability of outliving
experience more ups and downs
around R10m at age 60 lasts to
your money.
in your investment value, and
age 79 as you withdraw an income
In conclusion, if you’ve saved
your reaction to this needs to be
while earning only a real 2%
enough to retire comfortably
managed carefully, hopefully with
return (shown by the light grey
and you’re more concerned
the help of a financial adviser.
area). However, by continuing to
about reducing volatility, then a
However, if you save some of the
earn a 5% real return (depicted
conservative approach might be a
higher returns from good months
by the darker grey-green area),
viable option for you. However, if
to make up for the lower returns
you build up much more value
you haven’t saved enough and are
from bad months, this could go a
in your retirement pot over the
concerned about outliving your
long way towards overcoming the
years, and it lasts to age 90, or 11
retirement savings, you should
fear of volatility. •
years longer, while still drawing
seriously consider holding more
the same income. Put differently,
growth assets to help build that
First published in MoneyMarketing, August 2019
RETIREMENT: WORKING WITH WHAT YOU’VE GOT
D
iscussions around
stage in your life when you start
retirement typically
drawing retirement income
revolve around having the
from your portfolio. But one of
required funds to live comfortably
the key concerns for any person
once a person stops working. This
approaching retirement is whether
‘income for retirement’ is what
there is enough saved, especially
most of us save up for during the
given how life expectancy has
bulk of our lives.
increased over the years.
But what happens when
So, instead of spending 10 or
it comes time to decumulate
15 years in retirement, this could
that wealth?
easily translate to 20 or 25 years.
Arthur Case, Brand
This puts an enormous amount of
Marketing Director at Evergreen
pressure to ensure people’s funds
Retirement Holdings, believes
still work for them when they are
more must be done to highlight
no longer able or inclined to.
investment strategies around this critical aspect. Decumulation refers to the
“Of course, this is not only a challenge in South Africa but Continued …
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