How not to run out of money

RETIREMENT: WITH THE RIGHT STRATEGIES, YOU CAN ENSURE YOUR FINANCIAL SECURITY

- Hardi Swart

According to the Future of Global Retirement Report by Smart (2023), the biggest fear for most retirees is running out of money. This fear is valid, as retirement could span 20 to 30 years or even longer in some cases. Managing your savings over such an extended period requires careful planning, discipline, and the right strategies to ensure your financial security.

Here are seven essential strategies to make your money last throughout retirement.

1. Know your retirement number
The first step in securing your retirement is understanding how much you'll need to cover your expenses. Start by calculating:

> Essential costs: Housing, health care, utilities, and groceries.

> Discretionary spending: Travel, hobbies, and leisure activities.

> Longevity risk: Plan for 20 to 30 years or more to avoid outliving your savings.

A common rule of thumb is to have 20 to 25 times your annual expenses saved. For example, if you'll need R500,000 per year, aim for a retirement fund of at least R10 million to R12.5 million.

2. Break free from debt
Debt can be a significant burden in retirement, eating away at your savings and limiting your financial freedom. Evaluate your liabilities:

> Mortgage: Aim to have your home paid off before retirement.

> Credit cards and loans: High-interest debts should be eliminated as a priority.