With the increased cost of living, managing money in the retirement years can be a challenging exercise for many. Running out of money during one’s retirement years is a prime concern for many retirees. Although people have reasons to be concerned with the rise of economic pressures and the cost of living, consumers can lessen the risk of running out of money in retirement with proper financial planning and sound money management tools.
The recent 2023 FNB Retirement Insights survey shows that responses from participants over the age of 60 reveal that only 21% of respondents in this age group are fully retired, while the majority are either working full-time (38%), part-time (7%), or retired but still have a secondary source of income (33%).
Samukelo Zwane, Product Head of FNB Wealth and Investments, says, “Most people simply cannot afford to retire or are forced to make major cutbacks on their lifestyle during their retirement age. The fact is, even if you’ve planned and saved carefully for your retirement years, you will still need to carefully manage your income, investments and expenses to sustain your reserves.”
Below are some valuable lessons on retirement planning shared by the survey’s participants aged above 60:
• The importance of seeking expert advice – Seeking financial advice and guidance ahead of and during retirement is pivotal. This could be the make or break in sustaining retirement savings.
• Diversify income sources – Consider income diversification options such as investments, side-hustles or less demanding consultancy work, to keep income streams moving well into retirement. This will lessen heavy reliance on retirement income.
• Manage money wisely – Changes in our day-to-day lives have resulted in changes to our spending patterns. It’s a good reason to look at budgets with a new perspective. Reduce costs wherever possible, both on needs and wants. Some fixed expenses, like rent or a bond, can’t be changed but it’s possible to reduce expenditure on variables.
• Always practice discipline – Identify spending habits that can be eliminated, for example a membership not used anymore, or start cooking more meals at home instead of going out to eat as often. Keep a diary to track spending.
“Although retirees may not have a steady income like they did before retirement, it’s still possible to save money so that they have more to spend on what’s important to them, either by managing or reducing their expenses and leveraging some of their banking benefits,” concluded Zwane.
