Many people ask why they should take out a retirement annuity. Well I’m going to give you a few reasons why you should.
According to a survey done on working people who have reached the retirement age of 65, 47% are dependent on relatives; 31% are forced to continue working or take up second careers; 16% are dependant on a state pension, which is in the region R820 per month and only 6% are financially independent.
There are all sorts of other trends that make it essential to start planning well in advance for your retirement. Some of those trends are:
Increased Longevity: With improved medical technology people are living longer. Retirement funds therefore have to last much longer so that you don’t outlive your retirement capital.
Healthcare Costs: As people get older they are more likely to need medical care. Yet, more and more health-care related costs are being passed on to individuals after retirement. Many companies no longer subsidize medical scheme contributions for pensioners, and many pensioners are forced to reduce their medical scheme benefits, in order to afford the premiums, when they need it most.
Inflation: Inflation affects the buying power of a retiree’s income. That’s why it’s essential to have sufficient funds to provide for inflationary increase in income after retirement.
There are many products on the market to help you plan for retirement. Obviously the earlier you start planning for retirement the better. Too many people leave it for too late and end up as one of the statistics above that end up relying on family and friends. The earlier your start planning for your retirement the less it will cost you monthly.
Most of the facts and information above is courtesy of Liberty life’s website www.libertylife.co.za