How is retirement planning just like a braai, you ask?
*This content is brought to you by Brenthurst Wealth
By Suzean Haumann and Charize Beukes*
Every year in September, South Africans are encouraged to celebrate age-old traditions and customs on National Heritage Day. No matter your heritage, it's a day filled with joy and, for many, the braai takes centre stage.
This got us thinking: what if we could convince our clients to devote the same attention and energy to their retirement planning as they do this popular pastime.
After all, hosting a successful braai means planning properly, making sure you've catered enough meat and gathered all the dishes and special spices you need to bring out the best flavour. Once you're ready, you can then place the first pieces of meat over the coals you've carefully tended. What could be easier?
The truth is that planning for your retirement doesn't need to be any more complicated than this. After all, if you're able to break down a braai into a series of simple steps, then the same can be done when planning your retirement. Here's how:
Pre-retirement phase: getting the fire ready
Just as prepping for a braai starts with gathering wood or charcoal, your pre-retirement phase is about laying the foundation for a secure future. This is the stage where financial planning, health assessments, and lifestyle decisions come together to create a clear picture of what your retirement might look like.
Financial planning is like choosing the right wood: quality matters, because that will determine how bright and long your retirement 'fire' will burn. The time to maximise your savings is while you're still earning a salary because of tax-efficient pension plans and funds, as well as other instruments to build your nest egg.
Having a clear plan gives you a better picture of what future you can have if you stick to your discipline of saving every month. Your 'braai prep' should also include clearing out your debt: in the same way you'd clean your grill and tongs and dishes, being clear of debt will set you up for successful retirement.
An important factor that is often overlooked by clients is your health needs and costs in old age. That means not only staying healthy, but also having the right level of healthcare cover in place so that you don't deplete your retirement savings.
And lastly, plan to afford having fun! This can keep you younger and more engaged if your retirement is filled with friends and loved ones, social activities as well as hobbies and interests that keep you active.
Early retirement phase: getting the fire going
The early years of retirement are when the braai fire has just been lit. This phase is like watching the flames build, carefully nurturing them to make sure they're just right before cooking. It's an exciting time, filled with new opportunities, but you'll need to ensure you're pacing yourself.
Managing your finances is just like managing the meats and other treats you put on the fire. Everyone knows you can't simply throw the chicken, wors, chops and braai breads on at the same time! You have to carefully plan and monitor your fire so that the heat is just right for what is on the grill.
For your finances, that means setting a sustainable withdrawal rate, typically 4%, but adjust it to match your needs. Also, try get the balance right between growth stocks in your portfolio and less risky investments like bonds. Think of it as maintaining the right heat in the coals: not too hot, but still enough to cook all the meat.
Mid retirement phase: savour the sizzle
By the time that many retirees are between 75 and 85, they're usually in the middle phase of their retirement. This often coincides with pleasures like travelling, spending time with family, and pursuing hobbies. You know that feeling: when the coals are spitting and sizzling, smoke is rising into the bright African sun, and good vibes are being felt by all.
Obviously, you might have to adjust the grill height after a while to make sure everything is still cooking evenly. In the same way, you must be prepared to make adjustments to your finances so that you're getting the income you need without being over-exposed to risky, volatile assets.
This phase is about balancing the enjoyment of your wealth while maintaining enough heat in the fire to last.
Healthcare takes on greater meaning in this phase, with the potential rising for chronic conditions to emerge. Like adjusting the grill, your investment strategy might have to shift towards preservation rather than aggressive growth.
Late retirement phase: enjoying the feast
In the final phase of retirement, typically after 85, the fire begins to cool, and you can sit back and enjoy the meal. This is the time to ensure your financial resources are aligned with your healthcare needs and that your estate planning is in order.
It's an unfortunate reality that your health will deteriorate in this phase, just as the last embers of the braai burn out. Managing care needs and ensuring you have enough resources for long-term care becomes critical.
Therefore, your main focus with regards to your retirement savings is stable, income-producing instruments that won't expose you to unnecessary risk. You can also adjust your drawdown rate if needed, much like you'd carefully stoke the final coals so you can enjoy melted marshmallows over the remaining embers.
By the time you reach this stage, you should have your legacy and estate planning in place to ensure an orderly 'passing on of the tongs' to whoever success you as the braai master.
By looking at your retirement as a simple progression of steps, we believe you can more easily reach your retirement goals. And if you don't have any retirement goals, then now is the ideal time to change that. The process, like a braai, has to start somewhere. And the best place to start is with a plan.
If you feel inspired to make your retirement the ultimate braai experience, then don't hesitate to reach out to us. We can help you put together a step-by-step plan to reaching that goal.
* Suzean Haumann, Certified Financial Planner® professional, is head of Brenthurst Wealth Tyger Valley. suzean@brenthurstwealth.co.za
* Charize Beukes, Certified Financial Planner ® professional is an advisor at Brenthurst Wealth Pretoria. charize@brenthurstwealth.co.za
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