New online tool helps investors overcome retirement industry challenges

According to the South African Reserve Bank, total savings to retirement funds, annuities and group pension funds amounted to approximately 16% of a household's disposable income in 2012, which added up to a total of R311bn - placing South Africa among the top 15 of the world's pension industry ranks. Despite this, only about 10% of South Africans are able to retire without financial assistance.

Steven Nathan, Chief Executive of 10X Investments, says that part of the reason for this situation is the retirement industry itself, which often follows practices that are not optimal in helping South Africans achieve their retirement savings goals. "There are a number of challenges that investors face when trying to plan for their retirement."

He says that some of the challenges that investors face include; too much choice, complexity of products, high investment fees, a lack of transparency, as well as not understanding the difference between active and passive fund management. "Together, these factors can have a detrimental effect on an investor's retirement returns."

In an effort to counter this, 10X have launched an online Retirement Planning Guide that empowers people to take greater control of their retirement savings and create a sensible and realistic retirement plan. Developed in partnership with Cognician, an online coaching company, the Retirement Planning Guide takes users on an interactive journey and helps them build for a prosperous future by guiding them to ensure the right actions are taken.

"While there are many online retirement calculators available, they often do not help investors navigate the complexities and pitfalls within the retirement industry," says Nathan.

Nathan points out that most South Africans are disempowered when saving for retirement and therefore rely on the retirement fund industry to help them with their retirement planning. "There are generally two major challenges investors face when planning for their retirement. Firstly, people are simply not saving enough as a result of making a number of saving mistakes, such as; starting to save too late, saving too little and not preserving their savings when changing jobs."

He says that the second issue is that even if investors are saving diligently, the retirement industry's practices may prevent them from earning an optimal return on their savings. "These mistakes include; bad fund choices, under-performing fund managers and paying punitively high fees."

The Retirement Planning Guide modules explain the need to define a retirement goal, the importance of making the right choices based on logic rather than emotions or biases, the benefits of compounding savings and returns over decades, why investors need to take action sooner rather than later and how they can monitor their retirement savings progress.

Nathan adds that many investors often don't realise that there are simple steps that they can take to ensure that they are able to comfortably retire.

"As a user goes through the various modules, each of these steps helps to ensure that investors have a full understanding of actions that they can take to achieve their retirement goals."

The interactive retirement planning program, which is accessed on the 10X website, contains four 30-minute coaching guides ("cogs"). "By combining 4 books, 4 videos, 9 content links, 12 articles, and over 20 summary quotes, the Retirement Planning Guide brings together everything investors need to know to retire on their own terms," concludes Nathan.