Eliminate the need to borrow

If you need to borrow money for a project, or a new vehicle make sure that you do this before you retire. Banks are reluctant to lend money after you retire, even if you have good assets. They will question your ability to repay the loan without the benefit of a regular income. So, make sure that you access credit and pay it off before you retire.

If you need to borrow money in the run-up to retirement, and you can easily pay it back in under three years, you should consider using your home equity for financing as you will get a much better interest rate. Credit card companies will offer you credit even if you are nearing retirement. You should, however, resist the temptation to increase your level of credit card debt just before retirement.

No further use for credit

Even when you are employed, carrying a large amount of debt can put a strain on your financial resources. After retirement the strain increases. Your aim should be to have no further use for credit in retirement.

At least a year before you retire, start looking around for the best way to invest your provident plan pay out. Taking the money and putting it into a basic bank account not only gives you weak returns, but the interest earned on the money is then taxed. Instead, consider transferring your company retirement plan money directly to a preservation plan where you can probably earn higher returns. It is vital to seek the aid of a financial advisor before you do this.

If you need to shore up your retirement savings don’t forget to eliminate the little expenses. You may think that the daily deli sandwich at work is not a big deal in the grand scheme of things, but that added to your premium coffee, your weekly trip to the movies, and the R200 per month on unnecessary phone calls can make the difference between a mediocre retirement and a comfortable one. Don’t believe me? Look at what these figures add up to in a month:
Daily trip to the Deli: R25.00 X 20 = R500.00
Movies (plus drinks etc for two): R100 x 4 = R400.00
Unnecessary phone calls: R200.00
Total: R1100.00/per month.

This money redirected into an investment with a 10 percent return over five years would give you R85 000. This in itself is not a fortune, but imagine if you applied a more frugal lifestyle for 10 or 20 years.

Preserve capital as long as possible

It is a good idea to find a part time job in retirement. This income can be used to offset expenses and it will go a long way to preserving capital. Sixty-five-year-olds often don’t feel ready for a life of inactivity, and humans are living longer, so the chances are we will still outlive our capital. Make sure you have a balanced investment portfolio that includes a variety of different investment products. This is the time to find a top notch financial advisor to guide you.

If you plan to leave something behind in your will, consider holding on to stocks that have appreciated a great deal in value. Long term growth on good quality stocks have rarely disappointed investors.

Adequate insurance

Don't get caught without adequate insurance. Part of the price you pay for retirement is that you will have to give up company-provided benefits, like insurance. The loss of company-provided health insurance can cost you a lot. If your spouse is still employed, see if you can be included in their plan. Otherwise, you are going to have to do some homework and find your own medical aid. Do not overlook this, as healthcare costs are rising at an alarming rate. One major illness can wipe out a year of investment savings

When you retire, you may also lose company life and disability insurance. Although you may supplement those two policies with policies of your own, there is often no need to keep up either policy. However, you may consider hanging on to the disability insurance if you plan to work part-time. If you still have debt when you retire then you should continue to hold onto the policy until you are debt free.