A volatile financial climate has seen many South African pensioners in living annuities looking to increase their withdrawals to cover current cash shortages. However, retirement income specialist, Just, advises strongly against this, recommending instead that they find ways to trim their spending, or run the risk of their money drying up sooner.
Four key areas where retirees can look to cut back on their spending are recommended:
Ongoing self-isolation is advised for people over 60. This means a likely reduction in vehicle and petrol costs for retirees who can schedule home delivery of groceries and other essential items such as medicines, clothing and homeware. With vehicles sitting unused, it may be worth re-evaluating car insurance to take advantage of any premium discounts available. (One’s adviser is an invaluable asset in situations like this – editor)
In addition to the lowered costs of online food shopping which eliminates spontaneous purchases, social isolation has temporarily removed all food-related social gatherings, including going to sit-in restaurants and coffee shops.
|3.||Health and entertainment
Lockdown has seen the emergence of a plethora of virtual get-togethers via video conferencing. This should bring down or completely remove the costs of monthly health or social related subscriptions.
While the rise of technology usage could be seen as an increased essential cost, lockdown has also increased corporate competition, presenting an opportunity for pensioners to shop around for the best price offerings in terms of Wi-Fi, data and smart technology.
The benefits of cutting back on regular spending now are immediate and palpable. Just’s Twané Wessels reminds pensioners that once they’ve established their essential spending, it is important to consider retirement income in two pots: one pot for essential expenses for life and another pot for rainy days, flexible spending and capital gifts. Regardless of market conditions, she says that a pensioner’s approach to retirement income should always be the same: firstly to ensure that your essential expenses are covered with a guaranteed income for life that targets growth with inflation.
Click here to download the Just media release – it contains some good tips for your client.