Have you taken responsibility?

It is your responsibility.

Now that you have dealt with the past and, hopefully reconciled the present, it is time to deal with the future.

The first thing that we must all remember is that people come before money.  Money cannot protect you from ageing, illness or death but it can help your family survive these things, even when you are no longer around.

So, the first thing we need to look at is retirement. Believe it or not, your retirement package is an investment not an expense.  The statistics that I was able to find stated that more than 70% of South Africans could not afford to retire! I see people at the age of 80 still working, because they can’t afford to retire and only a few who are working because they want to.

Retirement age for most companies is at the age of 65 years. The problem is, that with the advancement of modern medicine, these same people will now spend the next 15 to 20 years retired. What happens to them? I see my parents who planned really well and have been able to retire to a retirement village and not have to rely on us, their kids to support them.  Obviously, they are not living as they did when they had a flexible income but they were able to get out of the rat race.  I also see quite a few people at the retirement village who are in their late 60’s and 70’s going to work because they have to. They put away for retirement but, either didn’t do it well enough or they started too late.   Many of the older people are now afraid of outliving their money as we live longer and longer, thanks to medical science.

If you are in a job that offers a retirement or pension package, take it and put in as much as you can.  When you change jobs, don’t spend your pay out, transfer it to another pension plan.

What about your health? Medical aid is expensive we know, but I personally feel that even if you are not on a medical aid, your kids should at least be on a hospital plan. This is not because the government hospitals are so terrible but because they are so overwhelmed with the amount of patients they receive and are often very badly managed, with equipment which is outdated, or just broken.  Waiting lists for specialist care is months down the line and surgery is often years away.

We have recently had stories in the newspapers about the abuse of women in government hospitals. While abusive nurses are not the exclusive domain of government, the ability for redress in private care is much better and the monitoring of your progression during labour is also much better and the care of an infant in distress is also of a better quality.

Chronic illness usually results in the need for chronic medication. Without medical aid, that means you are either at the mercy of government hospital queues or paying out of pocket. Kids in crèches spend an inordinate amount of time sick and needing to see the doctor. This all adds up.

Now we look at other types of insurance, life insurance, disability insurance and dread disease.

To me Life Insurance is probably one of the greatest things we can do for our loved ones. It means knowing that when we die, they will have at least have some money to ease the burdens that come with the loss of a loved one. I am grateful that my religion (Judaism) requires that we are buried in a shroud in a plain pine box without a feast afterwards. This means my family will not have to go into debt to see me off properly. I understand, and don’t disrespect other people traditions that require a send-off as a sign of respect, but I do question going into debt for it.

I have heard more than one story of a husband dying and the wife and children being left with nothing, not even a house to live in, because there was no life insurance. If you own your own home, the banks insist that you take out life insurance to cover your bond, but what happens if you are renting?

Disability Insurance, is insurance against injury that would cause you to be unable to work.  If, heaven forbid, this were to happen, you would still need money to live on but you no longer have the ability to earn that money. Insurance would go a long way towards paying those monthly bills.

Dread disease insurance, is probably one of the most underutilised insurances around, especially among women.  With breast cancer being so prominent one would assume that women, especially, would have dread disease cover. This insurance pays out after you have been diagnosed and allows you to take the time to recuperate during and after treatment.

There are some other topics that are important to consider. Assigning power of attorney, for healthcare and for your money, is vital. If, for some reason, you become impaired in some way and cannot make decisions about your own health (as with patients on life support or with terminal illnesses and dementia or Alzheimer’s) someone needs to be aware of what your choices are and have the power to make those choices for you.  What happens if you do not want blood products and are unable to verbalise this yourself? Are you an organ donor or do you not want to go on life support?

These are decisions that we must face now in order to be free to live a life with one less thing to have to worry about.

My advice is to look into these things, and start with the minimum necessary. You can add later but don’t go further into debt by taking out everything now. To me, you need life insurance, medical cover of some kind and retirement insurance to start.

Thank you for following this finance series.