It’s a fact… living in South Africa is not as cheap as it used to be. It’s a continual challenge – the Rand’s volatility combined with many economic factors such as rising fuel costs, increasing food prices, not to mention the increasing cost of keeping up one’s membership to a medical aid. All of these factors and more, make planning for our financial future an ongoing task. Knowing the value of money today, it’s almost impossible to believe that the average house price in 1985 was around R72,000 and one US dollar cost 93c. The same dollar today would cost approximately R15.00 or even more.
The impact of inflation is far-reaching. We continually have to review our financial plans to ensure that the risk amounts we’re insured for will sufficiently look after our dependents. If we become disabled and are unable to work, can we afford to pay what we need to? At retirement, would we be able to maintain our standard of living or will we run out of money? If we die, is there sufficient capital to look after our families left behind?
Let’s use an example to illustrate this – in 2016 a couple aged 38 will pay approximately R5000 per month as a medical aid contribution. Their contribution will increase to R39,940 per month at their age 65, based on the annual contributions increasing at an inflation rate of 8% per annum. They will need a capital sum of R7,370,000 at retirement in order to fund this premium in their retirement years. How much longer can you ignore this before you take action? To review your portfolio and make sure you’re ahead of the pack, please contact one of the Risk and Wealth Management team.
Senior Financial Advisor
011 778 9300
This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted. (E&OE)