In earlier generations, the concept of “retirement planning” was rarely considered by most working individuals. For many of our parents, a deduction for retirement funds was simply a routine item on their pay slips, typically directed to a Provident or Pension fund with little follow-up or active management. It was common for individuals to be unaware of the specifics regarding their retirement fund or its investment performance. This lack of financial literacy and transparency has resulted in a significant number of unclaimed benefits currently witnessed in South Africa.

Fortunately, advancements in media and technology have significantly enhanced the communication and education related to retirement funds. However, being a member of a retirement fund does not automatically ensure a secure financial future.

Here are several key strategies to keep you on course toward your retirement goals.

1. Work with a Financial Adviser

Many of us may hesitate to discuss financial matters, but these concerns can linger, particularly during economic instability. Avoiding conversations about finances can have serious implications. Qualified financial advisers can help you make educated decisions customized to your individual circumstances.

Consider posing the following questions to your adviser:

• Will my retirement savings sustain me throughout my life?
• Will I have adequate funds to achieve my dreams?
• Can I assist my aging parents financially?
• Am I prepared to handle my children’s educational costs?
• Does my legacy plan correspond with my aspirations?

Financial advisers provide guidance that helps individuals manage daily expenses, make informed financial decisions, and prepare for significant life stages—be they aspirational (like purchasing a home), inevitable (such as retirement), or difficult (such as unexpected illness).

2. Protect Your Retirement Savings When Changing Jobs

Historically, leaving a job often meant withdrawing from your retirement savings to address debts or expenses. However, with the advent of the two-pot system, accessing retirement savings upon leaving a job is now prohibited.

This system partitions your retirement savings into two components: a savings pot and a retirement pot. The savings pot, which includes one-third of your contributions, can be accessed under specific conditions before retirement. The remaining two-thirds is held in the retirement pot and remains untouched until retirement.

By maintaining discipline and concentrating on long-term growth, you can create a more secure financial future.

3. Contribute as Much as Possible for As Long As Possible

Compound interest is a formidable ally for investors. Early contributions during your career have the most significant effect on your retirement savings due to the exponential growth possible through compound interest. Contributions made in the first ten years could account for as much as half of the total retirement savings you will need.

With the implementation of the two-pot system, fund members can access their savings pot once every tax year. Nonetheless, it’s essential to let compound interest work effectively by keeping as much as possible in the fund for a prolonged period.

4. Take Full Advantage of All Available Retirement Fund Benefits

Some employees may overlook valuable benefits their employers provide as part of the retirement plan. In recent years, many individuals have encountered financial, physical, and mental challenges due to global instability and economic turmoil.

Employee benefit programs often include more than just savings. Employees may have access to various benefits such as rewards, medical aid, life insurance, critical illness coverage, and disability protection alongside mental health support. These offerings are designed to enhance employees’ overall personal and financial well-being.

5. Regularly Review Your Financial Situation

It’s crucial to stay informed about your retirement savings to keep on track. Fund members should expect updates on their retirement accounts at least annually; however, it’s increasingly common today to monitor this information more frequently. Most fund administrators offer online access, though some funds may only update values monthly rather than daily. While daily tracking isn’t necessary for long-term saving, it’s vital to periodically ensure you’re aligning with overarching retirement goals and to adjust your contribution rate, beneficiaries, or portfolio as required.

6. Stay Committed and Focused on Long-Term Goals

Concluding Thoughts:  Engage Actively with Your Retirement Fund

Your retirement results are directly influenced by the choices you make today and continue to make. Whether you’re many years away or just a short time from retirement, there’s always an opportunity to positively shape your financial future. Start by assessing your financial status, consulting with a trusted adviser, and maximizing the benefits of your retirement fund. By becoming more actively involved in your retirement savings journey, you can shift from being merely a fund member to fully engaging in your financial future. With proper planning, your retirement fund can be pivotal in realizing your retirement ambitions.

Liesl Kleinsmith – Technical marketing specialist at Alexforbes.

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