For some it may seem too late to start but as the cost of living rapidly increases, a substantial retirement plan has become an essential tool to survive the rat race.

Johan Lotz, advisory partner at The Wealth Corporation says while many discipline themselves to plan their lives well in advance, diarising important dates and social events, they tend to overlook one key priority, financial planning.

For most of us the New Year kicks off with great excitement and many goals to achieve -planning for your retirement should be one of them.

TIPS TO CONSIDER WHEN PLANNING YOUR RETIREMENT IN 2015 

1 Start Saving For Retirement Now
Ideally retirement plans should be implemented once you start working. The longer you wait to start, the larger the amount you need to save monthly and the harder it would be to save that amount. Do not underestimate the power of compound interest – even modest returns can generate good capital given enough time and discipline.

2 Accept Risk To Achieve Investment Objectives
There is a trade-off between risk and return. Higher risk is associated with greater probability of higher returns. Avoiding risk altogether can be a danger. Making money through investments requires you to consider the various kinds of risk and to find a balance to manage that risk.

3 Be Disciplined
Save enough for your retirement while continuing to work. Avoid enjoying too much of your current income in a wealthy lifestyle. Control spending in a way that your lifestyle lags behind your income, this will create capital for your retirement investment and will serve toward a more comfortable retirement.

4 Put Together A Retirement Plan
Structure your income to fit your retirement. A financial planner can assist you with planning and will be able to offer insight you may not have. With their knowledge and research skill, a financial planner will evaluate your investments on a regular basis to determine whether they are still appropriate for meeting your goals.

5 Make Use Of Tax Free Investments
There are increased benefits for people retiring from a pension fund, provident fund or retirement annuities. As of 1 March 2015, the first R500 000 of your lump sum will be tax free, if not used before. The remainder of your lump sum (one third for pension funds) will also be tax efficient.

Words: Dailyfix
Image: Fairlady