Mother’s Day may have been and gone,
but how about gifting a belated,
but meaningful gift to Mom or Gran?
Helping her get her finances on track
is a gift that will keep on giving
Money can be a tricky topic to broach with your parents and giving advice to your mom may seem a bit presumptuous, but even the savviest of people can sometimes do with a new perspective. Perhaps your mom is good with money but hasn’t thought of saving for retirement. Or she could have everything under control and will use the opportunity to share a bit of financial advice with you, too. Either way, when she sees how knowledgeable you are and how easy you’ve made it to take charge of your or her finances, she’ll be super impressed.
And whether or not your mom is retired yet, it’s never too late or too early to start securing her life after she leaves the workplace. Start by asking her what her plan is. Tell her you want to make sure she is on track to being comfortable and worry-free in her golden years.
If she is already retired and drawing an income from her savings, it’s worth suggesting she double-check that she is not drawing too much or paying away a fortune in fees. She can use the 10X Investments’ Living Annuity calculator to work out how long her savings will last, based on the amount of income she is drawing each month and, importantly, how much she is paying in fees. She might be spending more of her savings than is sustainable and storing up discomfort for when she is older.
On the other hand, she might be spending less than she could because she is anxious about outliving her savings. No one wants to see their mother living a meagre existence and worrying constantly about money, especially if she actually has enough saved to live a comfortable retirement.
If she is losing a fortune in fees, you can help her get on the path to big savings. A simple fee analysis and cost comparison will help her see how things would look in a low-fee environment. Moving from a high-cost annuity to a low-fee one would mean either an instant pay increase or the peace of mind knowing that her retirement savings will last that many more years.
Imagine your mum is drawing down a total of 5% of her capital each year, of which she is paying the industry average of 3% in fees. This means that someone else is taking 60% of her earnings, while she is left with just 40%. Moving to 10X Investments, which charges less than 1% plus VAT in fees, your mum can continue to draw down 5% of her total savings while paying herself a lot more, i.e. more than 80% of the drawdown goes to her.
If your mum is still in the saving stage of her life, she can work out if her retirement savings plan is on track by plugging a few basic numbers into the 10X retirement savings calculator. Both the Living Annuity Calculator and the Retirement Savings Calculator allow individuals to adjust the various inputs to calculate the best plan for their own circumstances, whether that be in terms of how much they are saving each month or how much they are drawing down each month as an income. Both calculators also generate easy-to-use plans in PDF format that can be emailed and printed out
There’s no easier way to give back to the woman who birthed you than by ensuring she is all set for life after retirement.
Article by Michael Rossouw, a senior investment consultant at 10X Investments
You’ve Earned It / YEI (https://youve-earned-it.co.za/),
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for South African over-60s
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