Phillip Kassel, a financial adviser at Liberty warns that if you are still in debt at the age of 45, you won’t have enough money for your retirement.
Kassel says that if you are living debt-free by 45, you’ll ‘have enough time to save the substantial amount needed for your retirement. He suggests that ‘most employees earn approximately 480 paycheques in their working lifetime’. Moreover, they ‘need to use these limited pay cheques to fund a retirement income of at least 240 months’. He advises that one of the most powerful things that you can do to save for retirement is to make any future debts time-bound.
The message is working. Personal loans are now the fastest-growing means of financial assistance. People are moving away from long-term debt. By offering a fixed amount of financial help for a specific period of time. South Africans, can find their way through a tricky period and pay the personal loan back within a couple of months. With modern personal loan lenders, their calculators help to make the process more transparent and easy to understand. Moreover, the customer can see how much interest they’ll pay over various different hypothetical periods. It’s easy to see why there is a move away from credit cards and long-term loans.
According to Discovery ‘the general rule of thumb in South Africa is that you’ll need to be able to replace 75% of your income to retire comfortably’. This is a lot of pressure for people to follow. Especially when they are not yet halfway through their lives, but already under pressure to be living debt-free.
Is it realistic to be Living debt-free under 45?
Can we change our spending habits to save for retirement in our 40s? Fifteen years ago we consumed debt without thinking. Credit cards were the de rigueur, easy to come by, people lived beyond their means. Then tough times arrived and we became savvier.
The trend today has been to move away from long-term debts to fund lifestyle choices, today. Consumers are more aware of their spending and are turning to time-bound lending, with a clear end date like personal loans. It is no longer so acceptable to charge things ’the card’, instead. Now we seek financial assistance only when we need to.
Saving for retirement under 45 ’is a tough ask, particularly in a low return, difficult economic environment and against a background. Where many people focus on immediate rather than long-term goals-sometimes out of necessity’.
What we can do is continue the move away from credit-cards and remain mindful. However, that high-interest emergency debt should be for a fixed (short) period rather than a tool to maintain a demanding lifestyle. As old age eventually catches up with all of us, these statistics cannot be ignored. With the cost of living high, 45 may be an age by which we should all aim to have moved on from debt as a way of supporting a lifestyle.
Instead, we need to plan to make debt a short-term option for emergencies only. The signs are that if we do this, we’ll give ourselves a fighting chance be on course to retire with enough to see us through comfortably.
Of course, retirement seems a long way off for those who are in their twenties and thirties. Additionally, our thirties and forties, are periods of constant change and growth. So, how long good behavior can last remains to be seen, however, the intention is there.
Have you managed to start saving for your retirement already? Maybe you have a great story of living debt-free success. We would love to hear your stories and tips below!