If you are looking at ways to trim your insurance costs it is possible to do so. You may even get the right amount of cover that you need just for your individual needs, but you may have to live without certain luxuries or benefits. Angelique Ruzicka speaks to the experts and finds ten ways you can reduce the cost of insurance while still retaining the cover that you need in the event of a disaster:
28 November 2012
Research has shown that the average South African will only have generated enough savings to purchase a pension of only 30 per cent of the salary they were earning before retirement.
These statistics are definitely a cause for concern.
Look out for the following mistakes when planning your retirement:
1. Waiting too late to save for retirement
Young people are more inclined to think retirement is years away and a problem for then, rather than saving for the future today. This is understandable but is a big expensive mistake many of us will make. The key is to start early by making monthly contributions to your pension either via your company or via a retirement annuity.
2. Spending retirement benefits when you change jobs
When you change jobs you should place your retirement benefits in other retirement funding vehicles called a preservation pension fund. This means that the original lump sum remains invested and untouched allowing it to grow through appropriate exposure to investment markets. By taking out the retirement fund when you change jobs, you will have paid a big tax bill on the pension, as well as having to start your saving from the start.
3. Investing incorrectly
One common mistake is investing too conservatively and the key is to make sure your investment grows faster than inflation (i.e you are getting richer). You must speak to a certified financial advisor to get the best advice.
4. Timing the stock market
People often think they can predict what will happen with the stock market and change investments in line with their predictions.
Research shows this very seldom works and, in fact, timing the stock markets very often ends up destroying your retirement savings. Once again the key is constant monthly amounts so that over time the highs and lows of the markets are smoothed out.
5. Not taking correct advice
To avoid making these very costly mistakes it is advisable to start using a financial adviser during your working life and continue with the advice during retirement. Choose some with the right qualifications such as a Certified Financial Planner (CFP) and before committing ask for references and make sure it is someone who you can build a good relationship with, as you maybe with the CFP for 20 or more years.
For further advice please contact DebtBusters on 0869 99 06 06 or visit our website www.debtbusters.co.za.