Covid-19 has reshaped the way we look at finances and retirement planning. We can’t deny that the pandemic has caused hefty economic damage and that people are feeling the pinch. But, luckily, this doesn’t mean our retirement planning has to take a backseat.
We don’t have to give up on our dreams of spending our time how we choose. With a bit of forward thinking, we can set actionable retirement goals, even during this uncertain period. This post will take a look at some of the ways we can safeguard your future.
1) Feelings Are Not Facts
How we think and feel affects the way we behave when making investment decisions. These cognitive and emotional influences are known as behavioural biases. In uncertain times, such as these, where we are surrounded by negative news and fearful chatter, it’s important to understand that feelings are not facts.
Don’t panic. Do some research into where your funds are invested. Pension fund investments are strictly regulated. And, investment managers have to diversify your investments, meaning that you won’t have all your eggs in one basket. The important thing is to keep calm and not make impulsive decisions.
Not everything is a worst case scenario. For example, some pension funds have 75% of their investments in equities – 30% of which is invested offshore. If you think about how the rand has declined in value against the US dollar, then that 30% of the portfolio may have increased positively.
2) Work From Home
One of the biggest benefits of the lockdown (financially anyway) has been the reduction in transport expenses. The nationwide quarantine confined all South Africans to their homes. Although this was a difficult period, many workers enjoyed unforeseen savings of up to R3 000 from petrol costs.
People who have jobs that are compatible with a virtual workplace should approach their employers and ask for dispensation to work from home. By doing this, you can continue to save on transport expenses and put these to better use – towards your financial future.
3) Remember The Long Game
Trust in the process. Many people, in the run up to retirement, may have already set out a route and ‘bigger picture’ with their financial advisor. It’s vital that we don’t throw away this plan on a whim.
A thought-out and diversified portfolio is an effective shield when facing turbulent times. Investors will benefit from a wide range of local and global assets in their portfolios. We can’t predict the direction of equities, but having a broad asset class diversification protects investors; pre- and post-retirement.
4) Extend The Timeline
Not all of us want to extend our work careers. But there are major advantages for doing so. Every year that you continue working is more time to build your savings. It also decreases the number of years where you will be covering your expenses with your precious savings.
The digital age has encouraged an environment of learning and instant communication. You can even go digital with your financial planning! This means you have a huge variety of resources at your fingertips. Register for online courses and strive to stay relevant in your industry. Learning is also an important contributor to mental health.
5) Reprioritise – What’s Really Important?
Many of us harbour an appreciation for luxury and exclusivity. This can stem from a desire to secure the best things in life for you and your family. The lockdown gave many of us time to reflect on our home situations and what’s really important. Family, health, lifestyle, relationships, travel…These were all concepts that were rendered fragile and priceless during the lockdown. We became concerned for our wellbeing and our material goals fell by the wayside.
Whether it’s private education for your teenagers or high-end goods, take some time to reassess the financial commodities and values you uphold most in life. The lockdown has presented an incredible opportunity for us to look at our high-consumption lifestyles and think about the meaning we attach to our lives and those around us.
Effective retirement planning is essential for your future. We can assist you in achieving financial freedom by accumulating the funds necessary to secure your future.
Contact us today to discover more about our retirement planning.
+27 11 839 2302