10X Investments recently hosted an informative webinar on taking control of your retirement savings to ensure that your money lasts. The panel discussion centred on what retirees can control, which includes fees, the asset mix in their investments, as well as managing their emotions so as not to make hasty decisions, such as reacting to a bad patch in the market by selling their investments at a low price and, thereby, locking in their losses.
Classic Business anchor Michael Avery hosted the webinar. He was joined on the panel by retiree Motlatsi Pule, a 10X Investments Living Annuity client; Chris Eddy, 10X’s Head of Investments; and Michael Rossouw, Senior Investment Consultant at 10X.
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Setting the scene, Michael Avery referenced the latest 10X Investments Retirement Reality Report, which paints a picture of the current retirement landscape in South Africa, where only a very small minority of individuals can look forward to a dignified retirement. He also mentioned that there is so much choice that retirees are often left to fend for themselves at a key moment in their retirement journey when deciding what to do with their savings.
Michael Rossouw quickly pointed to the importance of education in tackling SA’s retirement crisis, as laid out in the report Avery had mentioned. He said that 10X’s retirement experts focused a lot of their efforts on “explaining what the options and choices are for investors, and pointing out some of the pitfalls which can result in wealth destruction, and how you can avoid them through things that are in your control”.
Rossouw and the other two panellists brought a unique perspective from their own experience and skills to focus on three key factors that retirees can control to ensure that their retirement savings will last for the duration of their retirement.
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Know your fees
The very recently retired Motlatsi Pule, who is one of those rare retirement savers who interrogated every aspect of her retirement savings plan, said: “It’s not enough to know how much goes off every month towards your retirement. Some companies don’t disclose everything. If a company is not able to disclose all their costs and administration fees, that is when the red flag should go up and you should find out more.”
She added: “The [financial] statement might say, you “might” be charged this amount and it is your responsibility to find out exactly what they mean because it could be something that might shock you when the time comes.”
Reiterating the importance of knowing your fees, Michael Avery mentioned how he had discovered that his father had been paying approximately 5% in fees and the negative impact that had on his returns.
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Do your research
Michael Rossouw explained the various products available to retirees and said “understand the mechanisms within your vehicle, how a life annuity works, how a living annuity works. What are the major components and how do they mesh together to make sure that you actually don’t run out of money in retirement.”
Motlatsi explained that she doesn’t have a background in investment but had taken ownership of her retirement journey, because she wanted to know exactly where and how her hard-earned money was being invested. She urged others to not just “leave everything to the service provider”.
Commending her, Rossouw added: “Have conversations and refocus on things that are in your control by understanding the levers that you can pull, from a draw down perspective and fee perspective.” He noted that inflation and market return are out of investors’ control but other factors, such as asset allocation and fees, are not.
Control your emotions
Noting both that retirees can’t control what is going to happen in the markets and how volatile and uncertain the markets have been lately, Michael Avery said that understanding the market context in making decisions was very important.
Chris, who gave a presentation on various factors that drive market performance, added: “Manage your emotions and expectations so that when those different market environments come, and they will come quite frequently, you know what your plan is, what your expectation is so that you can follow through.”
To view a recording of this webinar that is packed with information and insight about the levers a retiree can pull to make their savings last in retirement click here.
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10X Investments is an authorised FSP (number 28250). The 10X Living Annuity is underwritten by Guardrisk Life Limited. The content herein is provided as general information. It is not intended as nor does it constitute financial, tax, legal, investment, or other advice. The client testimonial is based on her own experience and should not be construed as advice. 10X covered the cost of Motlatsi Pule’s trip to Cape Town to take part in the webinar.