While the current high inflation levels and rising interest rates are creating cost-of-living challenges for all South Africans, the impact of increasing costs is often most severely felt by the more mature segment of the country’s population.
For so-called ‘seniors’ – the broad label often applied to those who are over 55 – the economic challenges mean that good financial choices play an even more important part in their overall well-being and how they continue to plan for the future.
That is according to Sisandile Cikido, Head of Retail Investments at Nedbank, who points out that it is more important than ever for senior individuals to step back and assess their finances – not just to manage the negative impacts of the economic downturn, but also to capitalise on the positives.
‘As is the case with most grey clouds, the current increasing-interest-rate environment offers a silver lining in the form of higher growth on your savings,’ Cikido explains, adding that ‘and for seniors – particularly those who rely on an income from their saved capital – it’s important to take full advantage of the current higher-interest earnings opportunities.’
Cikido offers five key tips for seniors to optimise their money in the current economic climate.
1 Narrow down your goals
She explains that as we get older, it becomes increasingly important to map out a plan for the rest of our lives. ‘Narrowing down your goals from what they may have been 20 years ago is a great way to home in on what really matters and a realistic plan to achieve it, including saving any money as required.’
2 Think short- and long-term
Cikido emphasises that it is important to ensure that the narrower focus mentioned above still includes all aspects of your life, from health and living arrangements to retirement, legacy and estate planning and fun things like hobbies and travel. She also highlights the importance of thinking and planning for long- and short-term goals. ‘Research into Nedbank’s senior clients shows that those who have savings accounts are typically aware of the need for this long- and short-term viewpoint, with most saving towards a combination of retirement, emergency funds and general life goals,’ Cikido says. ‘And this type of balanced view is very important because it helps you to choose the right combination of savings solutions to match each of these goals.’
3 Make sure you are capitalising on better interest rates
According to Cikido, one of the main reasons people give for not saving is that they do not believe that the interest rates on savings accounts are high enough. ‘The recent interest rate hikes, coupled with the uncertainty in the share investment markets, has created a very compelling environment for savings,’ she says. ‘And with interest rates in double digits on some of Nedbank’s longer-term savings accounts, there’s never been a better time than now to start, or strengthen, your savings portfolio.’
4 Make that side hustle count for the long term
One of the consequences of Covid-19 was a decline in the income earned by a large number of seniors. Nedbank’s research shows that as a result many have turned to entrepreneurial ventures, or side hustles, to supplement their regular income streams. Cikido urges seniors to leverage that additional income for longer-term goals. ‘A successful side hustle is a great way to build up the finances you need for your long-term goals,’ she says. ‘And with a little careful planning and a healthy pinch of self-discipline, it may be possible to leverage the current high-interest-rate environment by saving a portion of that extra income in a long-term deposit account to benefit from the power of compounding over time.’
‘As we get older, our priorities typically start changing, new financial realities have an impact on our spending and saving actions, and good money management becomes more important than ever before in ensuring that we can enjoy the futures we want,’ Cikido says. ‘So, while the current high interest rates are not going to last forever, taking full advantage of them today, via a well-thought-out savings plan, could lay a solid foundation on which to achieve the tomorrow you want.’
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