Ensure yourself a large enough nest egg for retirement

A third of all working Namibians are still in debt after retirement, while more than a half of this population still has adult dependants to take care of. That is the harsh reality facing pensioners in Namibia, according to the results of the Sanlam Benchmark Survey 2013. &ldquo;Merely one in ten Namibians are saving specifically for retirement. This, along with high personal debt, makes it difficult for them to retire financially independent,&rdquo; says Sanlam. For every N$100 Namibians currently earn, N$73 goes to debt repayment. Nowadays, there are a lot of other expenses taking a bite out of people&rsquo;s retirement savings, such as schools, petrol prices, housing and basic living costs, which force people not to prioritise saving, says Johann de Wett, Sanlam&rsquo;s head of business solutions. De Wett is visiting the country from South Africa specifically to address visitors to the My Life, My Future expo on the importance of adequate retirement savings. Many people still don&rsquo;t understand the importance of compound interest in their retirement planning, he says. The more time left before retirement and the longer you save, the greater your retirement nest egg &ndash; not only because of the additional amounts you save, but also your capital grows through interest earned on interest - in effect, the power of compound interest. Suppose a 20-year-old saves N$500 a month, which increases by 10% per year, and shows a net investment return of 10%. The value of this investment by age 55 would be more than N$5.65 million. Saving that same amount, starting at age 35, and considering the same assumptions apply, your saved amount by age 55 would be only N$773 000. According to De Wett, it is much better to start saving at 20 than at age 40. It is definitely possible for young people to save, he says, the secret being to start with a small amount rather than nothing. &ldquo;Minimum premiums allow everyone to start saving for retirement, at a minimum fee. Young people have fewer expenses than older people,&rdquo; he says. Sanlam aims to raise awareness among more people, especially younger people, to start saving at a younger age and so lighten their financial burden. Expert advice on retirement planning is essential. International studies clearly show the difference made when people receive the right advice. &quot;They usually put away more for their old age,&rdquo; De Wett says. &ldquo;It is very important to determine your risk profile. Are you a conservative or aggressive investor?&rdquo; &quot;Once that is established, there are excellent tools that would fit your needs,&rdquo; he says. A financial analyst can help you determine your risk appetite. Each client&rsquo;s needs differ and it is important to select a retirement product that meets your specific needs. That applies to every stage of your life, De Wett says. &ldquo;Usually, younger people are more aggressive compared to older people, as they have the time to withstand market fluctuations.&rdquo; Sanlam&rsquo;s retirement annuity plans offer investors a choice between eight investment funds, all adaptable so that you can switch your investment between funds at any time. It also offers you the option of paying in additional amounts over and above your monthly contribution, or invest a lump-sum payment. You can also seamlessly continue your contributions in case of a job change. Once your retirement annuity plan matures, Sanlam offers you a choice of pension plans. It is possible to put away as little as N$150 per month if your term is longer than ten years. A minimum lump sum of N$3 000 can also be invested. Your retirement plan is probably the biggest investment you will ever make, says Sanlam.

Ensure yourself a large enough nest egg for retirement

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Namibian Sun 2025-05-29

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Ensure yourself a large enough nest egg for retirement

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Namibian Sun 2025-05-29

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