Best money moves for your client’s life stage

Intermediaries already know all the key things that could affect clients’ financial circumstances at different ages, but Danelle van Heerde, Head of Advice Processes and Tools at Sanlam, offers a handy synopsis with great insights for your clients.

Remember, you know your client best, so share these insights where you think they could be helpful.

In your 20s and 30s

When you’re financially unencumbered by kids, maximise on savings. ‘Put 10–15% of your salary into a retirement fund or annuity,’ Danelle says.

It’s also a good time to start putting cash into a separate savings account, building a nest egg for unexpected emergencies. ‘For this, aim to have the equivalent of three to six months’ income tucked away.’

You may even decide to use some of these funds for a deposit on a home later on. Either way, it’s a really good safety net to have.

Cover for medical expenses and disability are wise investments, too. ‘A hospital plan is good enough at this point, and additional disability cover is crucial when you’re the sole source of your household monthly income.’

In your 40s and 50s

Review the financial products you set up in your 20s and 30s with your financial adviser. There’s constant development, with benefits improving, so make sure your products aren’t outdated and still performing well, Danelle advises.

Climbing the corporate ladder? Make sure you’re accessing the benefits that come with promotions, such as retirement fund contributions or medical aid. And keep tucking away a portion of any pay rises into a savings or retirement fund. You won’t miss cash you never had.

Home loans and children may be part of your reality now, too. Pay more into your bond to reduce the loan term quicker. ‘Even paying just R100 more than you should each month helps,’ Danelle says.

When you become a parent, financial products, such as education savings for your child and life cover for you, should be top of mind. Also ask a financial adviser to help draft a will, appoint guardians and set out an estate plan.

60s and beyond

A financial adviser can help you prepare a retirement plan, pointing out which financial products to invest in to provide an income from your saved funds.

Products like investment-linked annuities offer you more flexibility by allowing you to adjust your income annually and change your underlying funds. On the other hand, products such as guaranteed annuities don’t allow you to adjust your income, but guarantee your income will last as long as you live.

Choose products that include annual increases to protect you against inflation.

Haven’t saved up as much as you’d like? Downscaling to a smaller home may help reduce monthly expenses, while taking on a part-time job – perhaps consulting from home – could help pad your income and give you a sense of purpose after formal retirement.