What can I do to boost my savings?

Are you nearing retirement age and do you feel ready to stop working full time? Perhaps you have been saving, but you're wondering if it will be enough. Don't worry - there are still things you can do to supplement your savings! Try one or more of the following options as far as your situation allows:

Tip 1: Save more

This is the simplest way to solve the problem, but not always the easiest. If you choose to follow this strategy, you should aim to save at least a quarter of your net income. How? Start by tracking all your current expenses and cutting anything that isn't really necessary or valuable.

For example, just two fewer takeaways or subscriptions to media platforms could save you R200 a month - an amount that can add up over the long term if invested instead. Sending any bonuses you earn straight to your savings is also a good idea.

An automatic debit order into a retirement fund will help you save more easily, and hold you to your smart savings decision. There are also many free online tools that can help you create a budget and track your spend - a little organisation when it comes to finances can go a long, long way!

Tip 2: Be more aggressive when investing

Consider investing a percentage of your portfolio in equities. Nowadays, many financial advisers advocate for the 110 rule of thumb, which states that the percentage of money that you have invested in riskier assets like equities should be equal to 110 minus your age. For example, at the age of 30, you could have 80% of your portfolio invested in equities (110 - 30 = 80), but at the age of 50, just 60% in equities (110 - 50 = 60).

This guiding 'rule' ensures you have enough exposure to riskier assets when you are younger as, over the long term, they are expected to grow more. As you get older and your investing time horizon shortens, you need to minimise your portfolio's risk - you can't afford a 50% crash in the markets at age 60!

So if you start saving late or don't have enough in your savings, you may need to increase the equity portion of your portfolio. Just remember to consult a financial adviser to help you make a well informed decision and avoid unnecessary risk.

Tip 3: Try to never cash out when changing jobs

To gain the full benefits of your retirement vehicle, you need to make sure that your money stays invested for as long as possible. By this stage, you should be adding to your savings, not eroding them. So if you are switching jobs and have the option to either cash out or to transfer and preserve your benefits, always preserve!

If you cash out, you will need to pay tax on everything you withdraw before retirement. But even worse is that you'll be wasting a great deal of growth you gained in the years that your savings spent compounding. Not only does resetting cancel out the gains you've accumulated so far, it leaves you with less time to start the process of compounding from scratch (check this table to see how much more it takes if you start saving again after age 40, for example).

Tip 4: If you can, retire later

Retiring later will enable you to keep contributing to your retirement fund for as long as possible, before you start withdrawing from it. Because we're living longer, it's common for many people to continue working into their seventies, even if it is only part-time. You can also consider consulting, teaching, exploring risk evaluated ventures and side hustles, renting out a portion of property you own, or finding a way to monetise a passion or hobby.