Money is something you've got to make in case you don't die

This quote from Max Asnas, Russian émigré and New York deli-owner sums up the sentiment of a series of recent Old Mutual presentations by Investments Marketing Manager Anil Thakersee, Paul Hanratty and John Bryant.

Old Mutual figures show that earlier retirement trends and longer life expectancies mean that many people will not have enough money to provide for their retirement years.

• More than 40% of females currently aged 60 will make it to 90, and more than 20% of males aged 60 will make it to 90. People do not expect to live long lives as they hear about HIV and other factors which have resulted in total life expectancy of South Africans declining.

• In the 1980's people retired at 65, had a life expectancy of 13 or 14 years and purchased a pension at 16% interest. In future, those who retire at 55 (increasingly possible due to early retirement or retrenchment) would have a life expectancy of around 28 years at 8% interest.

• Using these figures, you need about 90% more capital to buy the same level pension and about 50% more capital to buy the same CPI-linked pension

• Official statistics show that less than 5 million South Africans are currently contributing to a retirement fund. The remaining 19 million South African adults are likely to rely on the government to help them fund their retirement years.

• The above inflation increases of medical expenses are becoming an increasingly large portion of pensioners expenses.

But do not despair. There are measures that can be taken to help with provision in old age.

• Cut down on expenses now. A 35 year old person who spends R500 on a cell phone each month for thirty years, could alternatively generate R1 732 000 in retirement capital. This is assuming that the cell bill increases 5% pa, inflation is 5% pa and funds are invested at 10% pa.
• You can live more frugally in your post retirement years.
• You can reduce your debt
• You can work for longer

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