Retirement planning is a multi-level process and it continues to remain crucial. Given that retirement is a part of your life where you wouldn’t have active health to work or earn, you need to save today. 

Have you considered retirement benefits counselling?

Unless you are a businessman or an entrepreneur who gets to decide how much or how long they work, there is a cap on that. Employees must have a secure and planned financial cushion for their retirement. One of the most attractive parts of a job hunt is the employee benefit schemes that the employer provides. 

Many prospective job seekers look for workplaces that provide pension schemes, paid time off, sick leaves, maternity benefits, etc. Pension schemes and retirement income solutions are one way to ensure a fun and secure retirement. 

The regulations under the Pensions Funds Act make it mandatory to provide retirement planning independent financial advice to the employees. This provision was made to ensure that employees make a well-informed decision about their retirement benefits. 

What does Retirement Benefit Counselling Consists of?

Many individuals in South Africa don’t know how to manage their finances. It is, therefore, the duty of employers to make sure that their employees get retirement benefit counselling. 

Experts conduct retirement benefit counselling in the field and provide retirement planning independent financial advice. In addition, they run workshops and awareness camps for employed individuals. These workshops aim to provide a detailed insight to the employees about various retirement benefit schemes. 

These workshops help employees understand the investment portfolios, different pension schemes, and how to choose the best out of them.  

How do you help employees choose retirement income solutions?

One of the best ways to retire safely is to choose an excellent pension scheme. While looking at retirement benefit plans, many factors come to play. The most challenging part of retirement benefit planning is the calculation of risks and creating a balance between expected and realistic returns. 

Let’s have a look at those:

  1. Plan the time horizon:

Employers should advise their employees to make a time horizon assessment. First, the employees should note their current age and ideal retirement age. After which, they should assess how much money they need per year for their retirement. When they have calculated all of these numbers, they will have a clear picture on how much the employee needs to save until they retire. 

  1. Determine the future needs:

Future needs include living expenses like food, electricity, gas, automobile, and other necessities. Once that is calculated, they will know how much money they need every month after retirement. A significant factor to consider while calculating these future needs is inflation. Employees should consider calculating each of these needs along with probable inflation. 

  1. Gauge the income after the tax deduction:

When the employees start withdrawing their retirement funds, they will have to consider that their income will be liable for a tax deduction. Therefore, there is a need to calculate the actual in-hand monthly payment. 

  1. Balance investment goals vs. risk tolerance: 

Stocks as an investment are an excellent way to secure someone’s retirement plans. However, they are risky too. If your company offers you equity in the business, there is a risk factor. Employees should consider their own risk tolerance and investment goals. 

  1. Consider estate planning:

Now that a significant part of the retirement plan is discussed, the last stage, i.e., estate planning, enters. Estate planning is one of the essential parts of planning a retirement. Estate planning includes getting insurance, preparing for an individual’s assets after death, tax planning, etc. For example, a house/apartment will always fetch income in terms of rent or a suitable sale amount. Therefore, one should consider investing in property. Employees also need to decide on getting the best insurance plans for themselves. They should also plan on how to divide their assets amongst their family in case of their demise. 

Key takeaway

Retirement income solutions and retirement planning have become more critical than ever. Unfortunately, there is a significant stagnation in the number of people who plan their retirement. Many people don’t have a defined retirement plan, which could be disastrous for them. Therefore, an employer must create awareness amongst their employees about retirement benefits and planning. Retirement benefit counselling is an excellent method to guide employees toward retirement benefits.

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