Are you saving enough for retirement?
Once you know how much money you need in your retirement
savings (read this article if you don’t
), it’s vital to check you’ll achieve this goal.
Finding out you have a large shortfall the year before you retire will cause havoc to your retirement plans.
Here’s how to check if you’re on track…
How much money have you got for retirement so far?
Tot up all the savings you have so far for retirement. This includes cash, investments in stocks, unit trusts, bonds, gold, etc.
Also include other assets you plan to sell before you retire, such as a holiday home.
If you plan to downsize your home before retirement, add in how much money you’ll gain from this.
By adding all these assets up, you now know how much money you have so far for retirement.
How does this figure compare to your retirement savings goal?
Let’s say you’ve worked out you need R625,000 in retirement savings. And you have R250,000 so far in assets.
This means you have a shortfall of R375,000 (R625,000 – R250,000).
To check you’re on track to meet your goals, calculate how much is going into your retirement savings per year. This could be in the form of money you save each month or dividends you receive, for example.
Say you save R35,000 a year, you’ll reach your retirement savings goals in 10.7 years (R375,000/R35,000).
If your calculations show you won’t reach your retirement savings goal in a quick enough timeframe for your preferred retirement age, you need to start putting more money into your savings to achieve this.
It’s worthwhile doing this check on an annual basis, to ensure you’re on track.
So there you have it. How to check you’re on track to meet your retirement savings goals.
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