Ensuring your retirement plan will succeed

Duggan Matthews is an Investment Professional and Chief Investment Officer at Marriott, the income specialists.

Knowing whether you have saved enough for retirement is one of the primary causes of financial anxiety for pre-retirement investors. The current investment environment, characterised by economic uncertainty, coupled with a choice of over 1 000 unit trusts and a myriad of different products, has made it increasingly difficult to make informed investment decisions.

In order to plan for retirement, it is important to filter out the ‘noise’ and focus on the information you really need to know - how much income will my savings generate in retirement? If the income element of an investment could be reliable and consistent, then the future outcome of that investment could be predicted with a high degree of certainty. This information – the income produced by an investment - is the key to knowing whether you are saving enough today to sustain your lifestyle in the future.

Marriott can tell you what level of income your investments will produce in the future, thereby providing you with financial peace of mind. Our income focused investment style produces reliable and consistent income and capital growth over the longer term, thereby providing a more predictable investment outcome.

This income focused approach to investing has recently been endorsed by a study in the Harvard Business Review. Late in 2014, the review stated that “our approach to investing is all wrong. We need to think about monthly income, not net worth”. The successful implementation of an income focused investment strategy requires a choice of investments or securities that produce reliable income regardless of economic conditions or market volatility.

Typically, the type of investments which demonstrate this ability are companies which focus on basic necessities, enjoy country wide distribution and have strong balance sheets. These companies tend to fare well in both recessionary and growth phases of the economic cycle and are seldom at the mercy of a new idea, trend or fashion. Shoprite is a good example of a company with these attributes:

Marriott only invests in businesses of this nature and can therefore provide an accurate indication of the level of income our portfolios will produce in the future. This information will allow you to make financial decisions that are well informed, and to make additional contributions or defer retirement should you require more income.

One of the most tax efficient means of saving for retirement outside of the workplace is through a retirement annuity. Not only is the income earned exempt from all forms of tax, but the contributions made are deductible, subject to certain limits. Whilst the annuity earned from these savings is fully taxable during retirement, the benefits of tax-free capital accumulation from the re-investment of income, coupled with a likely lower marginal tax rate on retirement, makes this a highly tax efficient savings vehicle.

The Marriott Retirement Annuity provides long-term growth, a disciplined savings method and an on-going indication of your income at your projected retirement age. This, we believe, is the essence of a sound financial plan and achieving financial peace of mind.