Would You Rather Retire in Bermuda or South Africa?
“Don’t simply retire from something; have something to retire to” (Harry Emerson Fosdick)
One of the greatest financial stresses that many people face is whether they have put away enough money for their retirement. Being able to sustain your standard of living when you are no longer earning an income requires a substantial amount of capital.
How much that is exactly can differ quite a lot based on your circumstances. Do you own the house you will be living in, for example, and will you still be supporting extended family members?
What many South Africans might be encouraged to hear, however, is that retiring here is comparatively less expensive than most of the rest of the world.
Around the globe
A recent comparison by NetCredit found that the most expensive place anyone could retire to is Bermuda. The island lifestyle may well sound appealing, but you would need more than three times as much money to retire there as you would to enjoy the same standard of living in South Africa.
Life in Australia or New Zealand might sound attractive too, but you would need almost twice as much to retire in either of those countries as you would need here, according to the Ladders comparison. Even Fiji would be more expensive.
In fact, the analysis showed that you need less money to retire in South Africa than you would in many other developing countries. It would be more expensive to retire in Chile, for example, or Uruguay. You would need more money to retire in Poland, Hungary or Montenegro.
Even a move across the border might not be more cost effective. The comparison showed that it would be more expensive to retire in Zimbabwe or Mozambique. Botswana, at least, would be a little cheaper.
Make a plan
Overall, South Africans are very fortunate that maintaining a good standard of living after retirement here does not require as much money as it does in much of the rest of the world. However, it would be wrong to allow this to let anyone feel complacent.
The scary reality is that very few South Africans are able to maintain their standard of living once they stop working. Many realise too late that they haven’t made adequate provision for their retirement.
That is why planning and setting goals is so important. You should know what it is you are trying to achieve with your retirement savings, and know if you are on track to get there.
To give yourself the best chance of a comfortable retirement (ask your financial advisor for advice specific to your needs):
- Don’t only rely on your company’s pension fund. Open a retirement annuity, which has the added benefit of reducing your taxable income.
- Contribute to a tax-free savings account that has broader investment options than a retirement annuity and will give you tax-free income later in life.
- Commit to growing your annual contributions by a little more than your salary increase each year, and commit to putting away a percentage of any bonus you receive.
- Automate your savings with debit orders. That way you grow your capital without having to think about it.
Provided by Vaal Triangle Insurance
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