How Much is Enough?

The ‘Baby Boomer’ generation (those born between 1946 and 1964) are well and truly in retirement mode. The Boomers are unlike the generation before them, largely because the previous generation had, for the most part, worked for a single employer and then retired with a pension based on their fi nal salary. For them, the “how much is enough?” question was not as critical.

Many people struggle with the high cost of a sustainable and growing income.

That question is now a fundamental one for those working towards retirement and even currently in the retirement space. A real fear for many is running out of money and this fear has been exacerbated by major world events like Covid-19, roaring infl ation, and the Ukrainian confl ict.

Many people struggle with the high cost of a sustainable and growing income. If you engage with a bank, they may offer a juicy 8% per annum if you commit to 5 years. While an attractive starting yield, this is never going to work for a retirement that could easily last more than the original working career of the investor!

A sustainable growing income is much more likely to start at somewhere between a 3.5% and 4.5% initial yield. This creates great anxiety when one considers that a modest R 20,000pm retirement income (consider that the medical aid in retirement can easily cost R 10,000pm for a couple!) needs a capital base of somewhere between R5 million and R7 million.

Research has proved that few can navigate this territory without a skilled professional’s help. It is at times like this that a trustworthy fi nancial partner with a sound reputation for both honesty and sustainability becomes crucial.

Robin Gibson, Harvard House. Tel: (033) 330 2164, email: admin@hhgroup.co.za