There’s no time like the present!

To achieve the Holy Grail of retirement saving your clients should try to save 15% of their gross salaries for 35 years, and always preserve. Many South Africans stray from this “optimum” path by not contributing soon enough. Here’s what you should be tel

“Retirement planning is correctly viewed as a long-term project,” said John Williams of The Retirement Planning Bureau. But you should not despair if you wake up in your mid-40s and discover your long-term “plan” is in tatters. There’s no time like the present to begin working on an accelerated retirement savings plan!

Saving out of necessity

Williams wasn’t suggesting that 45 was the age at which to begin saving for retirement, but rather that it is never too late to reassess your personal finances. A client in their late 40s will have to address any savings shortfall out of necessity, and although the task is more difficult for a late starter, a lot can be accomplished in 15 years. Financial planners have a critical role to play.

Saving for retirement is like running a marathon. Your clients know where they are starting from and where they hope to finish. And just like the Comrades runner your clients will have to adjust their savings “pace” to accommodate economics conditions and life stages.

A central theme

You can assist by making the financial planning process central to your clients’ lives. You should engage with them on a regular basis and plan the journey to a sound retirement by setting waypoints and objectives… Excite them enough to feel that they are in control of their retirement savings plan.

Getting off to a late start is not the end of the world. We came across some wonderful advice in The Globe & Mail, Canada, a while back. “It’s never, ever, too late to start,” said Scott Gerlitz, a financial adviser with Edward Jones in Calgary. “It’s understandable for people to feel discouraged when they’ve experienced major losses and now have to start all over again, but the reality is something is better than nothing.” We’ll put a South African spin on some of his ideas for late starters.

Maximise tax concessions

He says your 50-something clients should avail of any tax concessions on retirement savings contributions available. You might recommend to your client to take out a retirement annuity in the event their monthly employer-sponsored pension fund contribution is less than the current deductible limit.

It’s easier to save when you’re older too. Williams reminds us that it’s a great deal easier to paint your income and expense picture through retirement when aged 50, than when aged 20, 25 or 30. Mortgage bonds may have been paid off and high ongoing education costs will probably have ceased. The percentage of the late starter’s monthly gross that must go to savings, although greater than the 15% recommended for early starters, is no longer unmanageable.

Chasing equity returns

With up to 15-years to the ordinary retirement age there is no reason for a 50-plus client not to have exposure to high-return equities. Check that your client’s investment choices on existing retirement savings and any additional savings are channelled into appropriate equity and property growth assets.

Additional cash can be squirreled away in non-life savings products such as unit trusts, exchange traded funds and directly in equities. In the latter case make sure you stick with companies with a good track record and regular growing dividend payments.

And remember – as the world’s demographics change – 65 needn’t be the “cast in stone” retirement age. Nowadays many individuals work beyond the 65-year stipulation – some by choice – others out of necessity.