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One of our primary goals should be to have a comfortable retirement.
Yet only 1% of us reach this goal.

Maybe you are saving something for a pension, but don't know how much you will need or whether you are saving enough each month?

That's like playing rugby with no goalposts; playing a game you can never win!
We need to have something to aim for otherwise we drift along and leave our future to chance.
We need to have something to measure our performance against.

Setting goals and give your life financial direction, purpose and vision.

The fact that we are living longer and will need more money than ever before in retirement, is reason enough to seriously consider your goal planning!

Spend some of your time dreaming! Seriously, no real goal is impossible. Think about where you want to be in the future and what you want out of life, whether that be in 5-years or 50. Then write them down.

Do you know that the second least frequently performed financial task by people, is not having a written financial goal plan?
(And the first; not drafting a current will).

Your goals can be both financial and personal like;

• I want to have one million rand invested in ten years;
• I want to own my house in eight years;
• At least once a year I want to go skiing;
• I want to own a business by age 40 and so on.

Goals must be understandable and measurable, especially a time-frame.
Don't make your goals too vague.
Just what does a comfortable retirement mean to you?
Qualify the word comfortable and so on.
Use affirmative words like I'm going to, I am or better yet, I see myself.

You may want to involve others who have a direct bearing on your future.
A family's financial goals must involve and be agreed by the family members, otherwise conflict may arise.

Divide your goals into short-term (less than 1 year), medium-term (up to 5-years) and long-term (more than 5-years).

Next revise your goals and prioritise them.
You only have so much spare money to invest in your goals so you need to prioritise which ones are more important.
Make two lists, one your primary and one your future goals.
Delete goals that you don't really want or need. This is not easy. You may find that some goals are unrealistic when compared to others.
The money you need for minor goals may be well-spent in other, more important goals, like retirement savings.

Prioritise goals by the time you need to achieve them and then by their overall importance.
Consider your available money. For example; you may want to pay off your bond before retirement (excellent strategy!)
But do you scale back on your retirement savings in order to do this?
The choice is yours. You will find you need to sacrifice some goals in favour of others.
Don't land up having too many goals that you need to reach at the same time.

Estimate a cost (in today's value) and a time in which to get there.
For example; Save for John's university costs - need R1,450,000 by 2034.

Expand your plan for achieving each goal. Using the university fund as an example;

• Investigate universities and degree costs.
• What is the inflation rate of fees?
• What are the other costs like books and clothes?
• Start investing R1000 per month into a unit trust by a debit order.
• Investigate types of investments considering risk and return.

Set a date at which to review your goals and do this at least once a year.
It is important to have short-term goals as you will get a tremendous feeling of satisfaction crossing them off as done!
And this will motivate you to continue.

A suggested strategy...

• Start today. The longer you delay, the worse your situation will become.
  Remember, like pushing a car, it is difficult to start but once you create momentum, it gets easier.
• Contribute the maximum to your Retirement Annuity or company pension plan.
  SARS offers you a gift with the portion of your contribution that is deductible from your income tax. Use it or loose it!
• Consider the amount of risk you can absorb.
  Higher risk equals the potential of a higher return and the younger you are, the more risk you can take. Call me for assistance in identifying your risk appetite.
• You must be realistic about your projections.
  The assumptions you use must be qualified and attainable. Again, seek professional advice.
• Don't touch your retirement savings before you retire.
  If you change jobs, don't use your retirement savings for current cash flow problems. You will never be able to catch up again.
  Transfer your retirement savings into a tax-effective investment.
• Create an emergency savings plan.
  You never know when you may need it and it will prevent you from having to use your investments before they mature, the worst situation you can face.
• Put life and disability cover in place now.
  You don't know when you or your dependants may need it.
• Pay yourself first.
  After all you work so hard for you and your loved ones, not the bills you face! Start a dedicated investment today.
  Set up a debit order and you will never look back.
  Invest regularly and before you know it, you will be accumulating an asset.

Goal setting is not to be taken lightly. Goals are extremely important in determining the your best financial planning strategy.

What if a disability STOPS your income?

YMYL: YOUR TRUSTED, QUALIFIED ADVISOR
Peter Pyburn - Authorised Financial Services Provider, fully licensed to render financial services since 1991. Death and Disability Planning; Retirement Planning; Investment Planning; Healthcare and Estate Planning. More...

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Last updateOctober 31, 2024