SPONSORED - In Johannesburg, two families, the Gumedes and the Smiths’, are navigating the joys and challenges of raising young children. Both families are committed to building a stable future, but they’ve taken very different approaches to retirement planning.
The Gumedes: Planning for Tomorrow, Today
Despite having financial constraints, Thabo and Lerato Gumede recognised the importance of retirement planning early on. With two children, school fees, and other living expenses, they knew saving wouldn’t be easy, but they believed in starting small. Their financial adviser helped them to create a customised financial plan suitable for their current lifestyle, their budget and future goals. “We started with small contributions,” says Lerato. “It wasn’t much, but we knew it would grow over time.” According to the Old Mutual Savings and Investment Monitor (OMSIM) 2024, findings, saving for a comfortable retirement is a top priority for working South Africans, aligning with the actions of the Gumedes.
With their financial adviser’s help, the Gumedes chose Old Mutual’s Max Investments Optimal Retirement Plan, a flexible option that best suited their finances and allowed for increased contributions as their income grew. With tax-deductible contributions and tax-free growth, it was easy to start saving for their retirement. *They chose to add a premium protection benefit to their plan, which meant that their premiums would still be paid if Thabo or Lerato became disabled during the policy term.
Thanks to the benefits of compound interest and consistent savings, they feel more confident knowing they’ve taken steps towards a more secure future.
The Smiths: Delaying Retirement Planning
On the same street, Jason and Sarah Smith have yet to begin saving for retirement. They’ve focused on immediate expenses like school fees and groceries without the benefit of budgeting, feeling that they’ll deal with retirement “later.”
The OMSIM 2024 findings show that many South African families, like the Smiths, underestimate how much they’ll need for retirement. As a result, families who delay saving often face difficult choices later, including cutting back on lifestyle essentials or relying on their children for support.
“We’ve lost precious time because we will be starting our retirement savings much later than what is considered ideal” says Sarah. “To make up for the lost time and ensure a comfortable retirement, we will need to significantly increase our savings contributions. Even though we’re starting late, having a plan is better than none, and it gives us hope that we can still reach our financial goals”.
The Key Takeaway: Start Small, But Start Early
The stories of the Gumedes and the Smiths emphasises the key takeaway from the OMSIM 2024 report: starting early is important, as time is a powerful ally. With compound interest, even small savings can grow substantially over time.
Marius Pretorius, Head of Marketing: Retail Savings and Income Product Solutions at Old Mutual, says, “There’s no perfect time to start saving for retirement. Use Old Mutual’s Retirement Calculator to find out how much you need. Start with what you can and increase your contributions as your finances improve.”
Begin saving today to secure your financial future and live the lifestyle you want throughout your retirement. Speak to a financial adviser or visit oldmutual.co.za/ retirement to learn more.
Old Mutual Life Assurance Company (SA) Limited is a licensed FSP and Life Insurer. *Ts & Cs apply.