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VIEWPOINT: Are you saving enough?

This article is the second in a series of six that explores six common mistakes that can negatively impact one’s personal financial situation.


Young professionals often wonder what is the best age to start saving. The simple answer is as soon as possible. The earlier you start, the better the chances of accumulating sufficient funds for your retirement. In addition, if you start saving too late, you will have to make more financial sacrifices, as you will have to save more each month than if you had started in your twenties.

When it comes to savings, it’s important to adopt a long-term approach. If your savings plan has a forward-looking focus, you’re less likely to get swayed off course by market events. So what can you do to ensure a long-term focus when making a conscious effort to boost your savings and to manage these savings sensibly? For a start, revisit your monthly budget and reallocate unnecessary spending or luxury purchases to a suitable savings vehicle instead. While a regular debit order into a retirement annuity, endowment plan, or discretionary investment product will ensure that you save in a disciplined and structured manner, these investments offer the flexibility for you to change or cease your monthly contributions without a penalty should your personal circumstances unexpectedly change.

Take a fresh look at your retirement saving strategy and at the progress you’re making towards other financial goals. Are you saving enough to meet your desired objectives? Have you set aside an appropriate amount for an unforeseen emergency? Perhaps now is a good time to meet with your financial intermediary and assess whether your savings are still on track.

Finally, research indicates that over half of all South Africans cash out corporate retirement benefits when changing employment. This is a huge mistake – by “borrowing” from your retirement savings when changing jobs you are essentially “stealing” money from your retired self. It is of paramount important to preserve these savings for the future to ensure a comfortable retirement. If a change in employment is on the cards, make sure you speak to your financial intermediary about the option of investing in a pension or provident preservation fund when you do so.

Author: Tiffany Boesch CA(SA) is group financial director of PPS