Raising children and preparing them for the big, bad world out there is a costly endeavour and one that consumes the bulk of any parent’s money (and time). For many parents this means they have not been able to save consistently enough over the last 20 odd years, and their retirement savings are not where they should be.
Heap shares a few tips to help empty nesters double down on savings and make the most of their final 100-200 paycheques.
Take a minute to assess your situation, do your sums and be honest
It's probably a good time to sit down and have a cup of tea with your partner and bring any financial skeletons out of the closet.
First, work out what you already have saved and understand how much money you will need for retirement. There are online calculators and tools available which will help you get off to the right start. The 10X retirement calculator will help you calculate how much you need to retire and give you a status report on how close you are to achieving that target.
If you're on track for a comfortable retirement, Heap says, that's fantastic. “You're one of the fortunate few. Any improvements you make will put you closer to that cruise to celebrate retirement.”
If you're not on track, she adds, you need to look at closing the gap by making more money or spending less, or perhaps delaying your retirement date.
“Whatever you do don’t lose hope.”
You are not alone (Only 6% of South Africans are on track for a decent retirement, according to the National Treasury) but, importantly, “it's never too late to improve your situation”.
Once you know where you stand you should interrogate your budget for opportunities to spend less. “There should be quite a few considering that the brood has flown.”
Start with your big-ticket items such as food, accommodation and transport.
Cut down on food costs
Now that your kids aren't eating you out of house and home it's a great time to mix up your eating habits and refresh your recipes.
Meat is the most expensive part of most meals, and it's not going to change any time soon. According to Stats SA, the price of meat increased by 9% between April 2017 and April 2018, double the reported inflation rate of 4.5% for the same period.
Yes most of us know meat consumes an ever bigger slice of the budget but not enough of us respond by introducing meat-free meals.
“Now that the ever-ravenous younger people are out of the house consider introducing meat-free meals,” says Heap. “Meat-free Mondays is a great concept.”
Take advantage of your new found space
Downsizing from a family-sized home to something smaller or moving from the neighbourhoods where proximity to good schools has pushed the prices up are often options for empty-nesters.
“But, for those who are not ready to say farewell to the family home for whatever reason, there are other options,” adds Heap
She suggests that rather than leaving rooms or cottages on your property standing empty, consider renting them out. Another idea is to convert a garage into a flat you can let out.
If this idea makes you think: “We just got rid of a hoard of people, we don't need more!”, consider renting additional space out for storage instead. An average 3m sq storage unit goes for approximately R1,000 a month.
Look under the hood
It seems like every time we turn on the news someone is talking about another fuel increase. The Automobile Association predicts there will be a 30c increase in July. Overall, according to Stats SA, fuel increased by 9% between April 2017 and April 2018. This item shares first place with meat for the biggest price increase.
If you are a two-car family ask yourself if it is really necessary, says Heap. “Is the foregone savings worth the added convenience?”
Let's say you were able to sell a car for R80 000 and you invested this money in a 10X Investments retirement fund for 15 years. This could increase your retirement pot by R172 000 (in today's money).
“Add in the extra money you would save on fuel, insurance and repairs, and you are looking at a significant difference to your quality of life in retirement,” says Heap.
If you are not able to or really don’t want to give up your car, at least make sure you review your vehicle insurance policy. It is relatively quick and easy to do an insurance cost comparison online. If you find a company that offers lower premiums or a smaller excess, take this to your current insurer and they might just match it saving you the hassle of having to move.
Research by Value Penguin, a source of information and tools to help consumers make better spending decisions, shows that drivers are charged the lowest premiums between the ages of 50 and 70.
“Don't miss out on lower rates because you couldn't find the time to speak to your provider,” says Heap.
