What to do once you retire

Retirement is your long awaited ticket to freedom, where you can relax, play and learn at your own time. Regardless, you’re probably a little nervous about it all. Following our advice will help you turn this new leaf into a journey of reawakening and adventure – all while staying financially astute.

Your new cost of living

When you retire, you only receive 1/3rd of your total pension fund savings as a lump sum in cash. By law, the other 2/3rd of your pension fund gets moved to a living/life annuity and will be paid to you monthly.

  • Four important things to remember

    • Once you retire it’s difficult to get approval for a loan, so plan accordingly.

    • Only the first R500 000 of your total pension fund is tax-free. This is a once off tax benefit and doesn’t start over every year.

    • Not all pension funds are structured the same and may have different benefits. Make sure you understand yours.

    • The amount you receive per month can be anything between 2.5% – 17.5% of your living annuity.

Your finances and income opportunities

Retirement means you stop working, but your money doesn’t have to.

  • Five things to keep in mind

    • You can look into low-investment business ideas.

    • You can look into dividend income funds and stock/bond index funds.

    • Tax free investment accounts are only tax free up to R33 000 income a year.

    • You should always keep a reserve account for emergencies.

    • You don’t have to spend your full pension fund income every month. Saving responsibly still applies after retirement.

How you want to live

Retiring doesn’t mean you can sit back and forget about making money. There are lots of opportunities to grow your retirement income. A financial advisor will help you play it smart with your plans and your money. 

  • Your house

    You could be spending too much on where you live. Capatalise on your assets by selling or renting out the big family home. Or you can consider a retirement village – this also becomes a great way to interact with a new social group.

  • Your car

    Cars are not a good investment, so if it’s not essential for you to buy a new one, then don’t. After all, experiences are far more valuable than possessions, so spend your money wisely.

  • Activities

    Retirement should be enjoyed. Keep your mind busy and your body active is the best way to live. Consider the following, and keep a good balance between indoor and outdoor activities:

    • Sports and other physical activities.

    • Creative activities where production meets imagination.

    • Intellectual stimulation like learning a new language or applying for an online course.

    • Spiritual pursuits like meditation and soul enlightenment.

    • Social interactions with family, old friends and new friends.

    • Volunteer work or part time jobs like mentoring, tutoring or even politics.

    • Travel. Get to know more of your own country and explore the rest of the world as much as you can.

Now you can live out exactly the life you’ve been dreaming of all these years. Happy retirement!

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