By: Neil Vorster
If you have Googled Retirement annuity, Retirement calculator or Retirement plan recently, you will no doubt have been exposed to the myriad of options offered by large financial institutions.
A quick calculation generally leaves one shocked and stunned.
Recently, I read an article by Peter Carruthers of Petes Weekly fame. Peter is a retirement and business expert and the author of “Crashproof your Business”. In it he stated that if you are 65 and want to retire, you need at least R2,5 million in cash to earn R10 000 per month. He was not for a moment insinuating that R 10 000 per month was sufficient to retire on, he was merely giving context to the problem. And from these numbers he offers, clearly a major problem looms for many!
It did get me thinking though, how many people out there are rapidly approaching their personal retirement deadline without a plan? And, how many others are relying on a retirement policy, RA or savings plan to provide for their retirement?
In truth, the average working person in South Africa retires at age 65 with only R300 000 which will provide a mere R1 250 per month. Shocking, isn’t it?
Unfortunately, for the man in the street, there doesn’t seem to be any other investment option freely available.
What then? Is there a solution?
Yes there is a solution, a personal residential property portfolio, but it requires a bit of forethought, some skills and a bit of legwork.
A carefully thought out and structured residential property portfolio can be a very effective retirement plan, and if added to a current retirement scheme, can be go a long way towards ensuring your secure retirement.
Residential property investment is amazingly accessible to anybody who has a reasonable consistent income and the barriers to entry in property investment are mostly lack of skill and fear of failure.
Neil Vorster of Organic Growth has put together a free training series that describes the basics of property investment, teaches some very valuable skills and shows you how to get started successfully.
Black Economic Empowerment
Black economic empowerment in South Africa has seen the exit from the formal job sector of many white males. Forced by their sudden un-employability, most of these men have started up their own businesses with varying degrees of success.
Employment in South Africa for white males, a perceived “insurmountable barrier” has been successfully overcome by many of these men, who now face the next venture into uncharted territory – retirement.
Their exit from the formal employment sector has meant that pensions are a thing of the past. With most of their financial resources tied up in business start-ups, focus has been on survival, with little thought and planning going into retirement.
The news on the street is that over 95% of South African entrepreneurs will not be able retire but will have to work until the day they die!
Peter Carruthers’s “Crashproof your retirement” article was written to focus attention on the retirement plight of the South Africans entrepreneur, and not a moment too soon.
I don’t know about you, but I am not going to rely on a retirement annuity and plan to face this retirement spectra full-on and even retire early with my rental income portfolio.