How good health influences your retirement financial strategy

ENTERING retirement in good health is a blessing, but it also brings with it the challenge of planning for a much longer life. While being free of illness can create a sense of security, it’s important not to become complacent. Here are ten financial planning considerations if you're healthy heading into retirement:

- ALEX ODENDAAL

1. Good health today doesn’t guarantee good health tomorrow: Being fit and healthy now doesn't eliminate the risk of age-related illness later on, especially as conditions such as heart disease, dementia, and cancer become more likely as you age. Don't let your current good health tempt you into cancelling or downgrading your medical aid or gap cover. Remember, if you downgrade, you can only upgrade again at the start of the next benefit year. Also, when budgeting, keep in mind that medical aid contributions typically increase by around 10% per year, which is well above inflation.

2. Plan your retirement accommodation early: While you may prefer to stay in your family home while you're healthy and independent, retirement villages often have lengthy waiting lists. Planning early gives you more options and prevents the risk of having to make hasty decisions later. If you intend to unlock capital from the sale of your home to fund your retirement, be mindful of market conditions and avoid a forced or distressed sale that could affect your financial stability.

3. Build flexibility into your retirement strategy: A healthy 65-year-old South African can expect to live another 18 to 22 years, according to the WHO’s life expectancy data. This means your retirement plan needs to remain adaptable over the long term. Your lifestyle goals and needs are likely to change over time, so avoid locking all your funds into compulsory retirement investments. Be sure to build flexibility into your portfolio by making use of appropriate discretionary investments.