For many young people, the idea of saving for retirement seems like something that needs to be done only when one is much older, more settled, or has paid off debts.
“So, when one looks at the illustration below one can see that to get to the same lump sum at retirement being R6,000,000 until the age of 40 most of the amount is made up of interest and returns in the investment. At about 45, the returns and contributions start equalling and after that it is the contributions that exceed the returns,” Ochse said.
“The moral here is that the earlier a person starts saving for retirement, the more they can benefit on the effects of compound interest. This means that the interest earns interest, over a long period of time.”When it comes to retirement, Ochse said there are a few things that one needs to consider.– For example, someone that wants to regularly travel in retirement will need more in retirement than someone that wants to be a homebody.
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