‘2020 vision’ or not, a plan is better than a prophecy

This year they are calling it 2020 vision, but still the “experts” who insist they can predict what is going to happen this year are living on a wish and prayer.

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Listening to the prophets and the pundits can be a fun distraction but, when it comes to planning for the years ahead, it is better to make a plan based on your reality – and focused on the things you can control – and get on with executing it.

In order to plan and save for the future, you need to know how much your life is costing you now. Start by drawing up a monthly budget to get a clear picture of your income and expenses. Expenses should include your fixed costs, such as accommodation (rent or bond), municipal bills, medical aid, insurance, food, travel costs, investment contributions and all other regular expenses.

It might take some courage to face up to the reality of just how expensive your lifestyle is. But, once you know where you stand, you can start thinking about how to maintain this lifestyle through your working years as well as in retirement. Nobody wants to suffer a big lifestyle hit when they retire, especially since most of us can expect to live for at least a few decades after our working lives have ended.

Creating a clear investment plan will make it obvious which variables are within your control. You can control, for example, how much you save and how much of your investment return you pay away in fees. You have no control over – or even sight of – what will happen with the markets, or how particular stocks will perform in the year ahead.

Last year’s 10X Retirement Reality Report revealed that 46% of South Africans didn’t have a retirement plan at all. Of those, 55% say they could not afford to save for retirement because they simply had no money left at the end of each month.

This data supports anecdotal evidence that a frightening number of South Africans have little-to-no hope of a half-decent retirement. The importance of incorporating retirement saving into your monthly budget cannot be overstated since it is your only sure pathway to a dignified retirement.

Yes, your regular expenses will change (and quite possibly decline) as you move closer to retirement: children’s education costs will fall away, you will hopefully be within touching distance of paying off your mortgage, you may even be in a position to downsize your home and pay off any other debt.

But as you reach retirement you might also have greater health costs and require additional funds for travel because you finally have the time to visit some of your dream destinations. So, until you say farewell to the world of formal work, it makes sense to use today’s budget as your guide.

Based on your current budget, you can quickly work out how much you will need to retire with dignity, as well as how much you should be saving now to achieve that. An online retirement savings calculator will do the sums for you. You will be able to download the plan that it generates to refer to later or discuss with family members. Creating a retirement plan with 10X will also introduce you to a simple formula for retirement savings success.

Creating a long-term investment plan and following it makes a lot more sense than listening to the so-called experts’ views on what might happen should South Africa get another credit ratings downgrade, or warning about the possibility of Eskom not keeping keep the lights on.

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