Plan your future by saving

Did you know that July is National Savings Month? Originally, savings month was a savings awareness campaign developed in South Africa but soon found its way to Namibia.

Savings month is aimed at promoting debate around key aspects of saving, raising awareness of the benefits of short-, medium- and long-term planning, building relationships with key partners to leverage future opportunities and getting consumers to move from ennui into action.

I am sure we can all agree that there are many things that one has to save for, but saving for your retirement is most important and unavoidable. When one starts out one's career, one is advised to save 15% of one's gross salary for retirement. This means that one has to save for about 35 years to live the same quality of life after retirement.

Traditionally, one reaches retirement at 60 years of age and with life expectancy in Namibia increasing, we are generally living longer and hence the need to save for our retirement years. The latest statistics by the World Health Organisation indicate that life expectancy in Namibia has risen to 64 years for men and 69 years for women.

The importance of saving for retirement can therefore not be overemphasised. According to the Financial Literacy Initiative (FLI), 89% of salaries in Namibia are used to service debt, leaving very little household disposable income, let alone anything for savings.

At the same time, research indicates that 51% of Namibians are financially literate, but only 32% of this population implements their knowledge of financial literacy.

This data paints a clear picture: that Namibians do not have enough long-term saving plans such as retirement savings for future use. While retirement can seem so far in the distant future, it is important to have a special retirement savings plan to be able to afford oneself the same quality of life as before retirement.

All too often people entering retirement do not place enough emphasis on personal planning to ensure they maximise their opportunities. This often results in people having to work long past their retirement years to make ends meets or elders depending on their children to look after them during their retirement years.

It is imperative to take the time now - at an early stage in your planning process - to think about the choices available to you in preparing for your retirement. Saving for retirement should not be left to the last minute, with proper planning you can start saving for retirement today.

This can be done either by investing a lump sum or some of your salary each month, or you can grow your money over time so that you can retire comfortably. Regardless of how much you need to or can afford to save, the most important thing is to start and stay committed to saving.

Retirement plans such as the Sanlam Namibia's Retirement Annuity is an effective way to save for retirement because your savings provide you with an income in your retirement years and when you retire you may take up to one third of your accumulated savings in a cash lump sum. The rest is used to provide you with a monthly income, your retirement annuity contributions to Namibian registered pension, provident or preservation funds reduce your taxable income up to certain limits, and the growth on your investment is tax free.

Your retirement savings are safe regardless of any personal financial loss you may suffer. This means your savings are protected from creditors.

A retirement annuity gives you an option to add other benefits like death cover, disability cover and waiver of premium.

To ensure you retire comfortably and maintain the lifestyle you desire, make the smart move and start saving today. Planning for your retirement is essential, and retirement investments that you make today will pay off in the long run.

STAFF REPORTER