As a stay-at-home parent in South Africa, securing your retirement can be a daunting task, especially when you’re not earning a personal income. However, with the right strategies, you can ensure a comfortable retirement for yourself. According to the South African Revenue Service, a preservation fund can be a great way to preserve your retirement savings, even if you’re not currently earning an income.
Why Retirement Planning is Crucial for Stay-at-Home Parents
When one parent becomes a full-time caregiver, the shift from two incomes to one can place a significant strain on the family budget, while the costs of raising children increase. It’s essential to make deliberate provision for the stay-at-home parent’s future security as part of a joint financial plan. This includes preserving your retirement savings, ensuring your spouse saves sufficiently, building an investment in your own name, and putting life cover in place.
Preserving Your Retirement Savings
Preserving your retirement fund benefits should be a priority if you leave employment to raise children. Even a relatively modest sum invested in a preservation fund can grow substantially over time, thanks to compound interest. A preservation fund allows your capital to remain invested, with the added flexibility of permitting one full or partial withdrawal before age 55.
Some key considerations for stay-at-home parents include:
- Ensuring your spouse saves enough to support both partners in retirement, by investing through an employer’s retirement fund, a retirement annuity, or both.
- Building an investment portfolio in your own name, funded by contributions from your spouse as part of the joint financial plan.
- Putting life cover in place to ensure that the surviving spouse has sufficient capital to fund household expenses, children’s education, and retirement savings should the breadwinner pass away.
For more information on retirement planning, you can visit the Financial Services Council website, which provides a range of resources and guidance on securing your financial future.
