Katherine Hewitt* has just turned 50, and purchased her first home this year to ensure she has a roof over her head when she retires.
But she, like many South Africans, is worried that she has left her retirement planning too late, especially as she has no savings, some debt, and only a small pension.
“Two years ago, I realised that, because I had spent my best work years freelancing and supporting my parents and siblings who were battling, I hadn't got around to thinking about ever retiring.
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“’Live for today, why even worry about tomorrow when it may not even come’, was my thinking.
“So I woke up on the eve of my 48th birthday realising I had nothing – no savings, a stack of Covid debt owing to my landlord who refused to write off even a fraction of it, and a rental that was increasing every year. I shuddered in fear.
“I realised I probably had 10 good years to get things right.”
With this sudden realisation and mind-set change, Hewitt chose to give up her freelance lifestyle and take a permanent job, which eventually helped her get a bond and plunge into the world of property.
“I managed to get a 20-year, 110% bond that paid for my transfer duties and also allowed me to get on the property ladder.”
She purchased a tiny fixer-upper in a small suburb and went about transforming it little by little, although it still has a way to go. But because it is a bedsit, she is unable to rent out a room to make money.
“Although I keep hearing how property can no longer be considered an investment, there is a part of me that is exhaling. Should I live another 18 years once my bond is paid off when I am 70, I know that I have a roof over my head, no matter what, and that no landlord can throw me out onto the streets.
“Of course I do have a knot in my stomach every time interest rates hike, and I wonder how, if they keep going up, I will be able to make payments.”
Hewitt has a small provident fund via her employer that she knows will not be enough when she has to retire (compulsory) in her 60s, but she takes solace in the fact that she will at least have something to tide her over for a few months.
“The reality is that I will have to work for the rest of my life. But at least a roof over my head will be taken care of by then... I hope.”
Furthermore, by being forced to tighten her purse strings, she has realised how little she actually needs to live.
Hewitt still worries about whether her decision to buy a property was the right one though, or if she should be looking for other, or additional, ways to diversify her money – something she is hearing a lot these days.
“However, I am very fearful of anything risky and, in addition, with rising costs there isn't much money to go around. Whatever I get goes straight to my bond.”
While it may be little consolation or offer much peace of mind, the 50-year-old is not alone with her concerns. Lee Hancox, head of channel and segment marketing at SanlamConnect, says the 2022 Sanlam Benchmark survey showed that 66% of South Africans are worried about retirement.
Getting started is sometimes the hardest part, and so she congratulations Hewitt for taking the first step.
“It can be overwhelming to know what to do though, but you don't need to walk this journey alone. Now that you have recognised the need to take a look at your expenses, as well as to prepare for your retirement, the next logical step is to partner with a financial adviser.
“It’s a common misconception that only the wealthy can afford a financial adviser, but no matter how much, or how little you're working with, the value of a good financial adviser lies in their ability to look at your personal circumstances and guide you appropriately from a financial planning perspective.”
Hancox says a financial adviser will help Hewitt create a budget, if she does not already have one, and help her re-prioritise her expenses so that she can direct funds to retirement.
“They will also discuss various strategies to help prepare and guide you on how to appropriately invest over the next ten or so years so that you can move forward with confidence, taking into account your appetite for risk, exposure to the market, and other factors.
“A financial adviser will also help you make informed and objective decisions based on the facts at hand, rather than being led by emotion.”
She adds: “Remember, rather late than never when it comes to saving towards retirement. Every little bit counts.”
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