Page 22 - TODAY magazine Issue 1 2021

YOUR DREAMS // RETIREMENT
3. I STILL HAVE DEBT. WHAT SHOULD I DO?
General advice, and common sense, dictates that by the time you retire your major debts – home loans, vehicle financing, children’s education – should be paid off. But that’s not always realistic. If you’re in that position, Paul Slot, a consultant to debt counselling company Octogen, has some advice.
Q: I’m 61 years old and took out a new home loan recently for R1 500 000. How will this affect my retirement?
A: ‘If you can afford the monthly bond repayments, the effect will be minimal. That said, if you can, start now and pay more towards it each month to reduce the outstanding amount as much as possible before you retire. If it will be difficult to make the monthly repayments after you’ve retired, consider scaling down to reduce your bond repayments and increase
your disposable budget.’
Q: Is debt consolidation a good way to pay off
all my debt?
A: ‘Any new loan attracts interest, initiation fees and monthly service fees. Debt consolidation will only help if the total cost of all this is less than the sum of your current costs and interest, and if you do not extend the repayment period. Extending the repayment period may well increase the total cost of the loan.
‘From a cost point of view, the consolidation loan could therefore increase the cost, which is not ideal. First see what you can save on and use that money to repay your debt faster. It will be more cost-effective.’
The answers provided are general in nature, and therefore do not constitute financial or other professional advice. They do not take into account your specific circumstances and should not be acted on without fully understanding your current situation and goals and objectives. A qualified financial adviser can help you with this.
4. WHAT ABOUT MEDICAL AID FEES AND DOCTORS’ BILLS?
As you get older, your medical expenses inevitably
will increase. Len Deacon, CEO of business-healthcare consultancy Len Deacon and Associates, explains what that means for your medical aid in retirement.
Q: I’ve heard of a really affordable medical aid scheme for pensioners. Should I switch?
A: ‘Make sure that you are on a good medical aid that has decent funding, that has been around for a while, and that you are sure will be around for a long time to come. Then you need to elect the option in that scheme that best suits your needs. Lastly, make sure that you
read all the information your scheme provides every
year with regard to changes and options. An additional safety precaution would be to appoint a medical-scheme broker to review your selection to be sure that what you have selected is solid and will meet your needs, and that you have not missed anything.’
Q: If I stay on the same plan, will I pay the same monthly fee after I’ve retired?
A: ‘The monthly contribution for your plan will remain the same as it was before you retired. Pensioners get no rebate or discount unless they have worked for an employer for a long time and still are on a defined benefit scheme where the employer determines what members are covered for. This, however, hardly ever is the case any more.’
// 20 // ISSUE ONE 2021
TEXT: MARK VAN DIJK. PHOTOS: GALLO IMAGES/GETTY IMAGES AND FREEPIK