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Retiring with Grace

Life companies have a vested interest in encouraging us to save more, but is this one of those cases where more may be less?

Eamonn Ryan




Listening to life companies, you’d think most pensioners are destined to frugal retirements and better get used to the idea now. They berate South Africans for not saving enough money towards retirement, and whenever they get the opportunity, cashing in what little they have saved instead of preserving it. Of course, they have a point. But go onto any social discussion forum and you will see endless complaints from individuals who have done exactly what life companies say they must, yet are disappointed when they see their actual savings after their life company deducted its costs.

What do they offer you in return for the approximately 2% of your capital they siphon off? It is not the capital – you earned that. It is not the return – the JSE or money market delivered that. In fact, these are not the right questions to be asking, says financial adviser Bryan Hirsch. It is all about savings. A country such as Australia has a national savings scheme, and South Africa has been pondering a similar solution, which removes ‘financial products’ from the equation and emphasises compulsory savings.

Sanlam does an annual survey which invariably reveals the need for more saving. Danie van Zyl, head of guaranteed investments at Sanlam Employee Benefits, says that 60% of pensioners say they do not have enough money, and Sanlam’s advice (echoed by the life industry) is that people should start saving earlier. Other revealing statistics are that on leaving a job, two-thirds of people opt to cash in their retirement savings, and worst of all 47% of members say they have “no idea” of what their retirement savings are invested in.

Disconnect between people and retirement

This reveals a disconnect between members (never mind the broader public who are not on a retirement scheme at all) and retirement, says Van Zyl. He says most people only wake up to the issue of retirement when they are about five years from it. The disconnect began 20 years ago when companies shifted from defined benefit to defined contribution. It is therefore not so much that people have lost interest, but when they needed to take an interest they failed to do so, and that is at the heart of the problem, says Hirsch.

Have a plan – and a budget

South Africans rank poorly in financial planning, but Hirsch claims their debt ratio is not as bad as many think – they have disposable income to save, they just don’t know it. “If you do not operate according to a budget, how can you identify costs that could be trimmed to make space for saving? A budget is critically important to calculating how much you can save – and often without even limiting your lifestyle,” he explains. Hirsch also says that retirement is something that has to be confronted: people need to work out exactly what they will need in retirement to live (taking into calculation savings they might have outside the retirement net) and work backwards to what they need to save now. “In particular, you have to pay off all debt including your bond, and make provision for future medical costs.”

The fundamental problem in South Africa is that retirement saving is not compulsory and its preservation not enforced. Current regulations almost encourage people to cash in, as the tax rate charged for it is a low 18%. “I believe even fewer people will consider preserving in the future,” says Hirsch.Van Zyl says there is another area that may soon worsen the savings rate. With the increase in compliance around pension schemes, many smaller funds are opting to join umbrella funds to minimise costs. That’s a good move, he says, but inexplicably Sanlam’s survey also demonstrates that many companies are using the excuse of the shift to reduce their employer contribution. So employees are now saving even less than before. He expects the shift to umbrella schemes to gain momentum.

Save 15% over 35 years

Sanlam claims that each individual needs to save a total of 15% of his income over a period of 35 years, whereas the average among members at the moment is 11,7%. With longer lifespans, even this may not be enough. European governments are currently looking at extending the retirement age to 68 or 70. In South Africa, with our youthful – and unemployed – population the trend is to lower it to 55.

Retirement planning is all about compounding – every month lost becomes harder and harder to make up. Another frightening statistic, says Van Zyl, is that pensioners can no longer bank on living off their own children. Not only are those children struggling to make ends meet, but half of grandparents today have dependents still living with them due to the impact of HIV/Aids. Members may cash in one-third of their benefit on retirement, which is supposed to be a ‘rainy-day reserve’ but a quarter of pensioners spend it intwo years.
Hirsch’s solution is for people to take control of their own finances – budget, quiz your financial adviser on every investment, especially the costs,  and minutely inspect every household bill for potential savings.

Investment opportunities

Supplement with an RA

For the individual in formal employment it is customary for membership of the pension scheme to be compulsory. Danie van Zyl, head of guaranteed investments at Sanlam Employee Benefits, says that if the combination of your employer’s and own contributions is not 15%, then supplement it with a retirement annuity (RA). If you are self-employed, then buy an RA up to 15% of your income. To the cynics who say life companies are making money out of them, and they could do a better job themselves, the life industry argues that people clearly aren’t, because whenever they can, two-thirds cash in their benefit. The benefit of contractual savings over unit trusts or property is that it forces people to save.

Before becoming a financial writer and freelance journalist in 1997, Eamonn Ryan was a legal adviser, company secretary and alternate director at listed company Cashbuild Limited from 1988 to 1997. Since becoming a financial writer, he has focused on the business and financial sectors, as well as personal finance, writing for Finweek, The Star Business Report, Sunday Times Business Times, Business Day, Mail & Guardian, Entrepreneur, Corporate Research Foundation (which brings out a series of books each year ranking SA’s best employers and best managers), as well as a host of once-off and annual publications such as ‘Enterprising Women’ and ‘Portfolio of Black Business’. He also writes media releases, inhouse magazines and sustainability or annual financial reports for various South African corporates and financial services groups, including the Ernst & Young annual M&A book.

Personal Finance

10 Tips To Become A Millionaire This Year

Becoming a millionaire requires changing your mindset and implementing some changes.

Murray Newlands



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Becoming a millionaire may seem out of your reach, but it’s possible with the right attitude and guidance. The fact of the matter is your income can only grow as quickly as you do, so you need to change your mindset to achieve your goal of becoming a millionaire.

Once you have a millionaire mind, you can’t lose it, no matter what financial or business mistakes you make along the way. To get yourself there, you’re going to need some structure. To help you, I’ve outlined the top ten tips you should follow to become a millionaire this year.

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Personal Finance

If You Think These 5 Things, You’ll Never Get Rich By The Time You’re 30

Five common mistakes entrepreneurs make when starting a business and how to correct them.



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Last week, I had lunch with a millennial who wanted some advice about a business he’s starting. After the usual small talk, we got down to discussing his business plan. Within a short time, it was clear that his business idea was great, his plan for executing was fairly solid and he had gathered together a strong team to help him make it happen.

So far, so good. But, to be frank, this guy has no chance of being successful with his current mentality. What it takes to be rich (or successful in any measure) has a lot more to do with your mindset than your ideas and plans.

From the time we started in business at the ripe ages of six and seven, our Grandpa Joe taught my brother Matthew and me many lessons about the details of running a profitable business. Over the years, we learned about how to create a business plan; how to market our products and services; and how to take care of customers, vendors and employees. All this knowledge has been invaluable to us in creating and running successful businesses. But, what our grandfather taught us about attitude and mindset trumps all other lessons.

Without calling out the specific individual I spoke with recently, below are five “hypothetical” attitudes that will get you nowhere in your journey to success – and the attitudes that should replace them.

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Personal Finance

5 Habits That Lead To Millionaire Business Success

You need the right habits if you’re going to succeed.

Timothy Sykes




What do all millionaire businesspeople have in common? Well, a lot of things.

I found from a recent study that 80 percent of all millionaires still go to work every single day. They’re working people just like me. But, they have to keep themselves in work or it all grinds to a halt. So what are the habits you need to make your business a success?

1. Patience

Nothing is ever going to come easy. You can look at the likes of Steve Jobs and Bill Gates, as well as the other usual suspects, to realize that success didn’t come with their first venture. Many of them failed time and time again. It took patience for them to become successful.

I read an article recently about 36-year-old teacher Andrew Hallam who became a self-made millionaire on a teaching salary. But, in his spare time he invested smart and lived frugally.

It proves you don’t have to inherit lots of money or become an instant success to make a millionaire business.

Related: 4 Ways To Become A Millionaire Even When You Start With Little

2. Dedication

You have to be dedicated to your craft if you’re going to become successful. Going back to Bill Gates again, he started his business in the back of his garage. Now that’s dedication.

It’s what I tell all my students. If they’re not dedicated to this, then they should leave. You need to be able to push through the barren periods if you’re going to reach the oasis of success.

3. Ambition and big dreams

Have you ever heard the quote, “Shoot for the moon. Even if you miss you’ll land among the stars”?

I take that to heart because even if you aim to become a billionaire and miss you still might be a millionaire many times over. Take the Wright Brothers as an example. Not content with creating a successful glider in 1902 they went on to create the world’s first airplane in 1903, making four brief flights in Kitty Hawk. It demonstrates the importance of dreaming big because you never know what you might achieve.

Related: 12 Millionaire Habits To Start Making Serious Money Soon And Build Wealth In A Hurry

4. Learn from mistakes

Every good businessperson will mess something up. It’s inevitable. What’s important is how you learn from your mistakes over time. Do you adapt after making your mistakes?

Millionaire businesspeople always set some time aside to reflect. Then they create a plan of action for ensuring that it doesn’t happen again. Most failed businesspeople put it down to “bad luck.”

5. Focus on niches

This important! Try to take over a whole industry at once and you’ll inevitably get swallowed up by the competition. Start small and control your own niche before moving into another niche. When you master your small area, you can push on and expand.

Related: 21 Choices Millionaires Make That You Aren’t Making But Should Be

You’ll be amazed at how much easier it is to expand after you master your own niche/audience first.

Do you have what it takes? That’s the question I always ask novice businesspeople. You need a plan and you need the right habits if you’re going to succeed.

This article was originally posted here on

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