Prudential Investment Managers

Prudential Investment Managers

May 2017

4 Life events that require financial planning

Life has a way of throwing up surprises that can test our financial well-being. Most of the time we manage to cope with them and make the adjustments necessary to stay afloat – and even thrive. But even if you are the type of person who is addicted to spreadsheets and planning things in advance, it’s worth taking note of the big life events that could throw you off course if you don’t prepare for them. We’ve identified at least four where it’s important to get some advice to make sure you get started or stay on track.

#1 When you get your first work break

You may have started out at the bottom of the ladder in your career. You could be carrying some student debt, need to get a new car for transport to your job, or be helping a family member financially. Those first years are tough for us all. However, as unlikely as it may seem, this is the best time to start saving for a comfortable retirement. When you get your first raise (but preferably before!), start saving. This could be as little as R500 a month in a unit trust fund or with a retirement scheme that gives you fantastic tax breaks. Your company may offer a retirement savings plan – take them up on it. The sooner you start, the more time your investments will have to work for you.

#2 Getting married

You’re crazy about each other and are ready to take the next step. You know what his/her favourite movie is, how he/she likes her coffee made and what makes him/her tick. But do you really know his/her attitude towards money? How much debt are they bringing into the partnership? Just like getting pre-marital counselling, you should meet with a financial adviser to look at each of your financial situations and decide what your future financial goals will be, how you plan to save and budget, whether or not you will have a joint account…there are myriad issues to discuss. Deciding these with an expert, who is neutral, to help advise you will prevent many future arguments – and give you a road map of your financial future to work towards.

#3 Having kids

Starting a family together doesn’t always mean you’ve got a marriage certificate in hand. The number of marriages registered in South Africa has decreased every year since 2008. But just because you’ve decided to become parents without saying “I do”, doesn’t mean you both shouldn’t pull out your pens and sign on the dotted line for an investment fund that your child will benefit from when they require funding for university. Starting a regular investment into a tax-free unit trust to which you can each contribute R33,000 a year (or a total of R500,000 per person over a lifetime) is a good way to start. Alternatively, regular unit trusts are cost-effective vehicles for saving for those unexpected expenses and coping with the high costs of raising children these days.

#4 Reaching the big 4-0

Hopefully, you’ve been planning for your retirement as you sailed through all the above milestones. If you haven’t, it’s particularly crucial to meet with a financial adviser when you hit the age of 40, as you’re nearing your peak earning years. Although you may think that 25 years left of saving before you retire at age 65 is more than enough time to build up an adequate retirement pot, it’s probably not. That’s because people are regularly living 20 years or longer in retirement. So during your peak earning years, it’s crucial to be saving as much as possible for retirement – and importantly, in the right investments and investment vehicles for you. Mismanaging your assets at this point could have an extremely detrimental effect on your retirement. To give you a sense of what your retirement savings needs are, try the Prudential Retirement Calculator.

If you’re not already investing with Prudential, contact your financial adviser or our Client Services Team on 0860 105 775 or at


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