Don’t overlook the cost of your health in retirement
It is said that your retirement years are the golden years of your life, which is why you should make provision for your healthcare expenses to maintain a lifestyle fit for what is also known as your “third age”.
However, this is often overlooked, making it very difficult for the majority of South Africans to get quality healthcare in their retirement years. In 2019, Stats SA noted that 47 million South Africans are without medical cover. Farzana Botha, segment solutions manager at Sanlam Savings says that people do not realise that making provision for medical costs will make up a large part of their income retirement.
According to Stats SA, 38% of South Africans over the age of 60 use chronic medication, around 20% use assistive devices such as spectacles, 10% wear hearing aids and 5% use wheelchairs – all of which are not necessarily fully covered if you are on medical aid and would need to be paid for out of pocket.When planning for retirement, you need to take into consideration that medical inflation is 3% to 5% higher than standard inflation.
Research shows the average replacement ratio – the ratio of the income you receive from your pension once retired – for South Africa’s retirement industry is estimated at just 25% to 30%. Botha notes that this implies that, on average, people with some form of retirement savings can expect to receive the equivalent of just over a quarter of their income at retirement as a post-retirement income.
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