Blue Chip Journal, Issue 77

RETIREMENT PLANNING
Retirement
planning
in the time
of Covid
How to navigate a smoother retirement
Retirement matters – to everybody. Generally, it is our biggest
asset and one we spend years and years accumulating. It
is no surprise therefore that there are a lot of decisions to
be made with regards to these savings as we draw near to
old age – decisions which have long-lasting impacts.
Making these decisions at the best of times is daunting – but
against the backdrop of Covid-19, it is an even more intimidating
task and, understandably, people feel vulnerable, regardless of the
retirement savings they have accumulated.
tax-free investment. However, remember that your tax-free savings
currently have a lifetime limit – so if you withdraw from this, you
cannot replace it and you would be foregoing the long-term taxfree
savings. The final option is to use your retirement savings, if
they are accessible.
For those who are not yet 55 years old and have a preservation
fund, you are permitted to make one withdrawal. However,
you would not be able to access the money in your Pension or
Provident Fund, if you are still employed.
What should you do if you are preparing for retirement?
For many people it’s time to start looking at retirement differently.
The reality of retirement has changed. The savings one has
accumulated at retirement are no longer guaranteed to last
through your retirement years due to higher costs of living, the
effects of forces like inflation and longer lifespans. Encouragingly,
the engagements that the Nedgroup Investments team has had
with people approaching retirement reveal that many people see
this stage of life as an opportunity to reinvent oneself. While
retirement from formal employment is likely, many people are
open to other avenues of generating income thereafter.
Ensuring a sustainable retirement capital is crucial. Staying
informed with regards to your financial affairs, keeping in touch
with financial experts and practicing responsible spending are still
paramount for people approaching or in retirement.
What if you need money now due to Covid-19?
Many people have been made redundant or have fallen on hard
financial times as a result of the Covid-19 pandemic. No amount of
planning could have prepared people for this kind of event, so it’s
important to remain realistic in terms of financial needs.
Before dipping into retirement savings, the best place to start
is with your general savings. The second option is to use your
The Nedgroup Investments
MyRetirement Solution offers an
in-person and online support
system designed to help people
make better decisions about
their retirement investments.
Tracy Jensen, Senior Investment Analyst, Nedgroup Investments.
If you are in the unfortunate position of having been retrenched,
you have the option of taking a cash portion from your retirement
savings, which will receive favourable tax treatment. The important
consideration to be aware of here is that you are reducing your tax
benefits at retirement.
On the other hand, if you are 55 years or older, you have the
choice to retire from any Preservation Fund or Retirement Annuity
Fund that you may have. If you choose to retire, you will have
to commit to a minimum withdrawal amount. This needs to be
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