Connie Bruwer from PC Bruwer and Partners advises about Retirement Planning

Question:  Many people on the eve of retirement have the anxious question of whether or not they will now be able to retire, given the negative market conditions. What is your answer to this question, Connie?

Connie:  The answer to this question holds no relation to the movement of markets over the past year. It is mainly determined by the savings pattern in your work life, and secondly by the standard of living you want to maintain after retirement.

Therefore retirement planning plays an important role.

Mr. Kobus Sadie of Verso Investment Services says that a cash flow model can give a clear indication of whether a person can retire and with what ease they will be able to live in the future.

Question:  What can overthrow initial retirement planning?

Connie:  A sudden change in working conditions leading to early retirement may upset your initial planning. For example, an individual who I know well, and is only 57 years old, has to retire early after 20 years of service. The value of his defined contribution due to the decline in the market has shrunk with several hundred thousand rand and suddenly the plan for early retirement, does not seem so beneficial anymore.

Mr. Johan Strydom, wealth planner at Citadel, says one does not need to determine the timing of retirement in terms of the state of the markets. Any annuity that he now buys, he buys at the same level as when he withdraws his pension money in the markets. The most important thing is to draw up a proper framework within which future investment decisions can be taken.

Question:  What important questions should people in this position be asking?

Connie:  Important questions that people should ask in this position is if they should withdraw their cash and, if so, it is wise to invest in something like real estate?

It should also be borne in mind that people live much longer than in the olden days. Given the longer life expectancy, one should ask the question – is it still possible to retire at 57 years? If one can earn another income after retirement, one can also put your pension money in a conservation fund.

Question:  When one does retirement planning, what must be provided for?

Connie:  In planning for retirement, provision must be made for an emergency fund and other capital expenditures (such as the purchase of cars) during retirement.

Should two-thirds of the pension money be invested in a life annuity, the withdrawals are limited to between 2.5% and 17.5% per year and the income is fully taxable.

The drawings provide the income. Ad hoc withdrawals cannot be done. If a third of the money is withdrawn at retirement, one will also have to provide for these needs, and it may not be advisable to tie it in any investment, including real estate.

In addition, the amount drawn in cash, will be taxable. The first R550 000 is tax-free, with the next R220 000 taxable at 18%. The next R385 000 is taxed at 27% and the remainder will be taxed at 36%.

The money that one will taken in cash, can help to keep the withdrawal of the life annuity as low as possible until a suitable retirement age and will also keep income taxes to a minimum.

The post Retirement Planning first appeared on PC Bruwer & Partners / Vennote.

REAL, DO-ABLE WAYS TO GET OUT

You’ve got a great job, a flourishing career and are finally earning a decent wage – so why is it you still struggle to make ends meet each month? Which of us hasn’t stalled an account payment, had a credit card rejected, or fobbed off the family with fishfingers the week before pay day? The reality is that if you’re doing any of these things, you’re courting debt, and the consequences can be cruel. Credit judgements have reached an all-time high, and some 1,2 million women have court judgement information recorded against them by one major South African credit bureau alone – information that will stain their credit profile for five years. Are you financially free or a walking overdraft?

Check the signs:

• You are unsure exactly how much you owe and are afraid to add it up;
• You have more than four monthly accounts, including retail store and credit cards;
• You miss account payments, and pay only the minimum or less on your credit cards;
• You often juggle bills, and pay some or all of them late;
• You postdate cheques so they don’t bounce;
• You get calls and overdue notices from creditors;
• You have reached the limit on your charge cards;
• You have increased your number of credit cards;
• You are getting cash advances from one credit facility to make payments on others;
• You have stopped contributing to a savings plan, perhaps even eroded your emergency fund – set aside for the unexpected, like a fire or being fired.

If you have identified with two or more of these points, you might be on your way to Debtsville.

Do the sums. How much do you owe?

• Include accounts, credit cards, car and home loans, the works. Be honest. How about your best mate, your mom or anyone else you’ve been sponging from?
• Pay off smaller accounts first, followed by accounts with the highest interest rate. Call the company and ask them to reduce their rate – tell them you will transfer the amount to another card if they don’t.
• Talk to your bank manager and arrange an overdraft facility – overdrawing without one is not just embarrassing, it can affect your credit rating.
• Check that you’re paying the lowest possible rate of home loan interest, and know how much your monthly repayments will increase if rates go up.
• If you do all your banking though one bank (home loan, cheque account, savings etc.) you should qualify for a small reduction in your home loan base rate and possibly for lower service fees – ask.
• Consider life cover, retrenchment or disability insurance on your home loan.
• Where is your money going? Everyone needs to eat, a roof over your head and clothes (so don’t beat yourself up for buying a suit when you need it). But if you are in debt, you are spending too much on something, so find out what it is.

There are ways out of debt, if you act fast

• If your debts have mounted to where your monthly loan repayments are more than 20 percent of your income, create a money plan.
• Go to the people you owe money to. Show them your plan, be honest about your financial situation and get a written agreement from each creditor who is willing to give you more time. Most businesses will respond positively to an honest approach. Stick to your agreements even if it means cutting your living costs to the bone – you’ll be surprised to see how quickly you pay off your debts.
• Resist the urge to borrow money to pay debt. Interest and admin fees will be charged and your monthly repayments could become even higher.
• Don’t ignore those letter demanding payment.
• Keep track of your money and never throw away a receipt.
• Look into getting a software package like Microsoft Money to help you keep track of what goes where
  Reconsider your approach to credit cards – a debit card may be better
• Draw up a detailed budget and stick to it. After your rent or bond payment, save at least 10 percent of your salary, divided between long, medium and short-term plans:
  • Long term, you should have a retirement annuity in addition to your company pension fund.
  • Short term, savings for an emergency fund (car repairs, holiday etc.).
  • Once this totals R10 000, transfer all excess from then on into medium term savings: fixed deposit, or unit trusts that can be accessed in a matter of days should you face a major emergency.

The post Debt Management first appeared on PC Bruwer & Partners / Vennote.

Connie Bruwer from PC Bruwer and Partners gives advice on this important topic.

Question:  A customer wrote that her son died without leaving a will. She wants to know what her grandson’s legal rights are. If I understand the letter correctly, the facts are more or less as follows: Her son had a relationship with someone with whom he had a son. He and the child’s mother was never married and she was later married to someone else. The child is now an adult. His mother and her lawyer is now demanding a share of the deceased’s estate. The client wants to know what her grandson’s rights are.

Connie:  First something in general and then we will look at the facts of this case. If someone dies intestate, his assets are dealt with in terms of intestate inheritance laws. This law requires that certain steps are taken and dictates who and how much one might inherit from the estate after debt obligations and other liabilities and taxes have been recovered.

If the deceased were married in community of property, the estate will be divided in two since he only owned half of it. One half remains the property of the wife (if she is the survivor) and the husband’s assets (if he is deceased) are then seen as intestate.

Then the “rule” follows that the assets should be divided according to how many children there are plus if he was married. The net estate is divided equally between the children and the wife.

If the woman’s share is less than the amount to be determined by the minister, she should at least receive a minimum amount. Currently the amount is R125 000.

If there was no spouse, the full estate will go to the children in equal shares. If one of the children dies, the children of that child will receive his / her share. If there are no children, everything will be divided in equal shares and will go to the parents etc. – always to the immediate family. Where there are no next of kin, it will be forfeited to the state after 30 years.

Therefore, the first question in our case will be: Was the man married?

Question:  How is a marriage interpreted nowadays?

Connie:  In today’s world marriage is widely interpreted, but from the client’s letter it seems to me the woman was married to someone else. I think it would be safe to assume that he was not married to her.

It seems that there were no other children, thus the son to whom the customer is referring to, seems to be the sole legal heir. According to the intestate inheritance laws he will be the only one that will have a claim to his father’s net assets. In other words, he should get everything that his father owned. The fact that the woman is his biological mother is not grounds enough for her to be a part of the estate claim.

It is of course interesting that if she dies without a will, the son can also claim her estate on the basis that he was her child, unless he is adopted by someone else.

Either way, I do not know on what grounds the woman is claiming a share of the estate. From the information, it seems that it could not be for child support and the fact that you slept with a man, does not give you a right to his estate.

I suggest the grandson goes and see the Master of the Court (a good lawyer would certainly be better, but more expensive) and try to sort this thing out, because, according to your information, he is the only legal heir and the mother’s claim appears to be her taking a chance.

The post The importance of wills first appeared on PC Bruwer & Partners / Vennote.

One often hears how people complain about how they cannot manage their money, and that they are forever in debt. Yet a lot of these people earn a fairly good salary, but they do not know how to work with their money.

Financial discipline is important. The best intentions that one can have is to have less debt and to cut your expenses so that you do land in a major predicament. Budgeting is the word!

Hint: Get a book in which you write down all your expenses and look at the expenses at the end of the month. Now you can easily tell how much you need to budget for food, clothing, recreation, telephone, petrol, and all the other things that a person needs. If you budget now and cut on unnecessary expenses, you can have a wonderful feast at Christmas without being in financial trouble again afterwards.

Credit cards: People should beware of credit cards and if needed rather take other forms of debt. If you use your credit card, you will end up paying much more because of the high interest. Many people have more than one credit card, or a credit and a petrol card. If you cannot pay your card bills, not even by using your savings, it’s time you reviewed your finances. Rather transfer the debt to the credit card which has the lowest interest rate. Thus you will just pay one monthly payment to pay off your different accounts (which you will already feel better about) and you have also have chosen the cheapest option. Get rid of your credit card if you cannot discipline yourself to only use a certain amount per month. The interest that one pays on credit card purchases, is blood money.

Know your limitations: It is often the case that people try to live beyond their means, sometimes just not to have to “hide away” from their neighbours or friends. Do you really need that expensive new car or can you rather still drive your current car? Are all those luxuries really necessary? Who do you want to impress? Are all those luxuries really worth it if you then lie awake at nights, worrying about the debts you have made and the years you will struggle to pay it off?

Christmas gifts and purchases: Make a list of everyone who you need to buy presents for – this way you don’t have to do last minute shopping at great cost at the pharmacy or the gift shop. Budget how much money you can spend on each person and stick to it. Also buy gifts in advance – gifts bought earlier are often cheaper. Also look out for special offers. Ask yourself whether an item that you are buying is really needed before you put it in your cart. Do not be swept away and hastily start buying. Stick to your shopping list. Think carefully before you withdraw money at the ATM. It helps nothing if you only have enough money to buy what you need today, if you know you have to fill up tomorrow and go to hairdresser. Rather withdraw the extra money and keep it in a safe place so you can use it tomorrow. Otherwise, you pay extra bank charges for two withdrawals instead of just one.

Convenience cards: Also take in consideration if the convenience of e.g. a garage card is really worth the effort. For example: if you have a garage card, you pay probably R250 per year for the privilege, as well as about R10 per time you use it. You can have save as much as R500 a year by not having a garage card.

Hint: Draw up a list and work out what you will need. Look out for special offers. Many stores have specials on especially cold drinks and food. Buy liquor in crates. It works out much cheaper than if you buy a bottle of wine, and what is left can be used as gifts. Buy meat in bulk and take cold drinks with you. Things like milk, bread and fresh fruit and vegetables can be purchased at your holiday destination.

Nowadays it is also perfectly acceptable to ask the family who come to visit, to assist with food and drinks. Decide in advance who is responsible for what.

ATMs: Be especially alert when you use an ATM. Criminals are especially active in busy shopping centres where unsuspecting ATM users are focusing on their shopping. Consumers should in no circumstances give their PIN to someone or write it down on a piece of paper or on a cell phone. Not even family members, friends or bank officials may know what your PIN is. Try to get as close as possible when using the ATM and use your body as a shield when you enter your PIN, so that other people cannot see your number. Criminals often use cell phone cameras to take pictures of your card and PIN. Only enter your PIN if the ATM asks you to do so. Do not accept help from a cheerful bystander. Criminals can distract you while you type in your PIN and can swap your card with another card. Cancel your ATM card immediately if it is stolen or if your card is swallowed by the ATM. Phone the toll-free number that appears on the ATM. Also mention anything suspicious at an ATM to the police or to the bank’s anonymous fraud line.

The post Learn to keep your head above water with your finances first appeared on PC Bruwer & Partners / Vennote.

Connie Bruwer from PC Bruwer and Partners gives advice on this important topic.

Question:  I recently heard that 94% of all South Africans cannot retire carefree financially. Why is this so, Connie?

Connie:  Pension benefits that are provided by companies, are probably insufficient to fully provide for a person’s retirement needs. Inflation reduces your money’s purchasing power, which means that over the years you will have less and less to be able to buy with an income equal to your current income. With the advances in medicine and medical technology, people are living longer. The average lifetime of low-risk men and women is currently 85 and 90 years respectively. Retirees, who have no support from their former employers in respect of contributions to their medical scheme, carries a heavy burden precisely at a time when medical care is probably the most important. More and more people retire early or take a retrenchment package. Your retirement years can possibly be longer than your working life.

Question:  We all dream of retirement in which we enjoy life, but the reality is that many people then live with the bare necessities or are dependent on family favors and sponsorships.

How can you calculate whether your retirement savings should be enough for a carefree old age?

Connie:  If your life expectancy was twenty to thirty years after retirement, you should make sure you have saved about R20 for every R1 you plan to spend in a year. For example, if you need to survive on R80 000 per year after retirement, your pension and savings should amount to R1,6 million.

The calculation, however, does not include the effect of income tax on your capital. If you have to pay an annual rate of 20 percent on your taxable income, you will need R25 for every R1 of your annual expenses – thus your pension and savings would be R2 million.

There is also inflation to be reckoned with – it causes your money to have less buying power every year. At the current inflation rate of 4 percent per year, the R80 000 you now have, will worth less than R77 000 next year. After twenty years it will have less than half of today’s purchasing power. It is therefore important that investments in which you invest your pension, at least keep pace with inflation. Many people think shares are too volatile and therefore invest their pension money in cash.

Question:  What is the best – shares or cash?

Connie:  In the long term, shares grow much more than cash. Provided you play safe, you increase the chances that you will outlive your savings.

Take for example someone that withdraws 5 percent of his retirement money per year to live from. If he invests between 40 and 50 per cent of his retirement money in shares, his money will last ten years longer than someone who only invests between 20 and 30 per cent of their funds in shares.

Question:  What is the biggest mistake retirees make?

Connie:  The biggest mistake retirees make is to invest conservatively as they have a long life expectancy. An investment in the largest shares on the exchange, which has a relatively low risk area and should continue to grow, will take you far.

Question:  What should investors stay away from and what should they be aware of?

Connie:  Stay away from the small shares that attracts speculators.

Another mistake is to spend too much at the beginning of your retirement. A guideline is that you are never to withdraw more than two percentage points above the rate of inflation each year. If inflation is 4 percent, you may withdraw no more than 6 percent of your savings each year.

Question:  How do you calculate whether you have enough to retire?

Connie:  To calculate whether you have enough to retire, you need to figure out how much annual income in retirement you will need. Your home and car should be paid off and you will likely spend less on transportation, because you do not have to go to the office. You no longer have to do pension payments and your tax rate should be lower.

Question:  But many retirees want to travel and need more money, is that not so Connie?

Connie:  According to a report from Absa wealthy people spend about 20 percent more in retirement than whilst they are working.

In contrast, those who are struggling financially, are forced to cut their budget after retirement.

Question:   What is the biggest money consumer for retirees?

Connie:  The big money consumer is health care. Recent local research showed that someone at age 65 who retires with one dependent’s health care bill for the rest of his or her life can amount to R650 000. For an eighty year old with a spouse, it is about R250 000.

Question:  What do you suggest the readers should do?

Connie:  After you have calculated what your annual income should be, you should contact your pension fund to determine what their projection for the pension fund payment will be with retirement. On the ground hereof, you must invest in a pension fund. Work out how much your other investments will be worth after your debt is paid off and invest more money per month, if necessary. Only 6 percent of all South Africans save enough for retirement, so make sure you are one of them.

Question:  To conclude, what other tip you can give our readers?

Connie:  Make sure that the pension fund you receive at retirement, pay out for the rest of your life, otherwise you might find yourself without money after a few years.

The post How can you save enough for retirement? first appeared on PC Bruwer & Partners / Vennote.

Let’s face it…no one likes to think about death. But, like taxes, it is a certainty. Unlike death, though, with proper planning, you can structure your estate to avoid some of the roughest blow of the taxman and ensure your wealth stays in the family.

Connie Bruwer, Managing Director of PC Bruwer and Partners, and also an expert in the area of wills, gives an explanation below of the importance and the right way to plan your will and estate.

Your will–the cornerstone of your estate plan

A will is the most important document in your estate plan. It states how and to whom your possessions will be distributed when you die. It’s also the document most commonly challenged in court. Because of this, you need to have your will be crystal clear on what happens to you and your estate upon your death. Regardless of its scope, your will should do the following:

  Annul any earlier wills;

  Provide for paying debts and funeral expenses;

  Specify how you want property distributed and when;

  Name beneficiaries;

  Specify charitable bequests;

  Name executor, trustee(s) and guardian(s).

Peace of Mind, Control and Privacy: The Power of a Will

A will can provide for peace of mind. You can sit back and enjoy life without worrying about what would become of your spouse, your family and your estate, should something unforeseen happen to you. A will also gives you control. You decide where your property will go. And you decide on the people who will ensure that your wishes are carried out, such as an executor, trustee (s) and guardian (s) who will settle your estate and manage and distribute your assets.

  The Executor: Be sure to list an executor in your will. The executor is the person who makes certain all the legal and financial issues are taken care of in addition to assuring that the wishes articulated in your will are carried out. They must work with the courts, banks, insurance companies, accountants, lawyers and all beneficiaries.

  The Trustee and Guardian: You may also wish to choose additional trustees and/or guardians as necessary. A trustee oversees the terms of any trusts you may have established while a guardian is legally authorized to take care of any surviving minors or those that cannot take care of themselves due to mental and/or physical handicaps. A will can also provide a measure of privacy to ease the sting of probate. Upon your death, your estate goes to probate, and without a will, your affairs all become a matter of public record. Anyone can know your business and that of your spouse or family. The sooner, quicker and cleaner you can get through probate, the better

The Probate Process

Planning your will is comparatively straightforward. The problems arise after you have die. Following your death, your will must go through a process known as probate. This legal process involves validating the deceased’s will, collecting the deceased’s assets, liquidating the debt, paying necessary taxes and distributing property to heirs. It isn’t necessarily a problem transferring property under the probate laws. There are, however, grounds for avoiding the probate process.

Making Probate Easier for your loved ones
To make sure that your loved ones aren’t exposed to unnecessary delay or confusion during probate, you should follow these basic guidelines to bulletproof your will:

• Draft your will when there is no doubt that you are sound of mind;
• Videotape the signing of your will. This way there will be proof of your intent, sanity and the lack of coercion;
• Make sure your spouse is not in the room while the will is being prepared and signed, and make sure the witnesses note it. This may seem extreme, but in cases where a family member charges coercion to get the will overturned, it will be very hard to prove coercion when there’s physical evidence that your wife was not present during the will’s creation or signing;
• Mention every member or your family in your will — even if it’s just to politely disinherit them;
• Record your wishes in a number of documents. The more backup you have, the less likely for your will to be overturned.
• Finally a properly drafted will can provide you and your family relief in a time of uncertainty and upheaval. Not only does it provide direction, but it will help avoid unnecessary and substantial estate taxes, if composed appropriately.

For more information on wills please contact Connie Bruwer or Ansja Ferreira, experts in the field of wills and estate planning.

The post Important advice about Wills first appeared on PC Bruwer & Partners / Vennote.

Connie Bruwer from PC Bruwer and partners gives advice about this important topic.

Question:  I recently heard from someone at a major trust company, who did a quick poll, that nearly 30% of substantial estates and wills will have a cash shortage.

Connie:  Many people buy a life policy to address this cash shortfall as identified by a counselor. This is the correct route, because life insurance is and remains the cheapest way of making money available. But then a lot of people do something stupid.

Question:  What do they do, Connie?

Connie:  The policy is made out to a beneficiary, mostly to save on executor costs. The problem is that a policy that is directed to a beneficiary, is not taken into account in the calculation of the executor’s costs because it does not flow through your estate.

Question: How is executor costs calculated?

Connie:  Executor Costs (3.5%) is calculated on the gross value of the estate. Thus the cash deficit is not resolved by the sale of the policy.

Question:  Can you provide us with practical examples so that we can understand it better?

Connie:  I will present two examples to explain this better. A man bequeathed everything to his wife. The beneficiary life policy paid directly to the woman, and the money does not flow through the estate. The woman received the money from the policy and wisely invested that money. Meanwhile, it takes the executor a month or two or three, before he gathers all the details for the completion of the estate. This includes details of debts of the estate. But then there is no cash in the estate to pay the debt.

Question:  What choices does this woman now have?

Connie:  Now this woman has two choices: Either she gives a portion of the policy proceeds to the creditors that can be paid or she has to sell the house to get money to do it. Because the money is on a fixed deposit, the woman’s house will have to be sold.

Question:  What other example can you give us?

Connie:  A young man with a good income decides to buy himself an apartment and a rather expensive car on credit. But one way or another he incurred the debt without any security or policy. Then he died. The will says that his partner must inherit the car and the apartment. Unfortunately his partner will be on the street as the bank has repossessed the car and the apartment. There was no cash in the estate to pay off the debt and the executor has no choice but to otherwise take action.

Question:  How can one stop such a fiasco from happening?

Connie:  If you do your estate planning by an expert he or she will point out if there is any shortage of cash in the estate. Make sure you work on this deficiency, and be careful to not simply allocate the policy to a beneficiary to save on executor funds. Ensure that all debt obligations as well as the cost of your death, such as funeral costs, executor costs etc., can be covered from available cash.

Question:  The bequest of cash to minor heirs are also involved here. Explain.

Connie:  Sometimes, in broken marriages, you get the situation, that man bequeaths money for his children directly. One must realise that the money will be controlled by a guardian, or it could even end up in the master of the court’s Guardians’ Fund.

Question:  What is then the best option to provide for your children in your will?

Connie:  It is better to create a trust in your will that will observe the child’s care until he or she is of age, after which the trust can be terminated and the rest of the money paid to him or her.

Question:  To conclude, what other advice do you have for our readers with planning their estates.

Connie:  In their financial planning the reader must understand the full consequence of their death and not do emotional appointments and leave instructions that might later adversely affect their relatives. Many trust companies are now willing to negotiate administration costs whilst you live. Do this as part of your planning, because then you have control.

The post Important aspects regarding estate planning. first appeared on PC Bruwer & Partners / Vennote.

Connie Bruwer PC Bruwer and Partners discuss this important topic.

Question:  We are regularly confronted with the issue of ‘a simpler lifestyle’. Such a lifestyle is not only one of a number of truths – it is in most cases enforced on a person when he / she retires. Let’s talk a little about this, Connie.

Connie:  It is true that very few people have enough to invest in their pension funds to live like they did in their pre-retirement lifestyle after retirement.

It forces them to make changes in their lifestyle.

For many people this may be traumatic to do, but if you know that worldwide people are looking at a simpler lifestyle , it might be something to think about again and actually get excited about.

Question:  The question is: What can a person do to established such a scaled-down lifestyle and to ensure that they do not feel that you are being sent to a detention camp, but rather to a new adventure?

Connie:  It’s not nice when you have to work just to pay the bills.

There are some things that can be done.

* Buy a smaller house. It is expensive to have a big house and to maintain a large garden, as well as to heat a home.

* Drive a cheaper car because a cheaper but reliable car usually consumes less fuel.

These days most cars, even ones with an engine of 1,600 cc, have many luxuries and you do not have to feel that you are worse off than you are by driving a cheaper car.

Many people are willing to do with such a sacrifice if such a sacrifice means that you can play golf more often or go on holiday.

Question:  What else can be done?

Connie:  * Leave the expensive TV services. There are cheaper alternatives available that can also offer your favorite shows.

* Interest. Cut the credit card in half, or ensure that you pay the full amount outstanding every month.

* Pay your car off in three years. Pay extra money available on your home loan.

This way you can saving a decade or hundred thousands in interest.

* Do not buy what you do not really need.

* If you are already doing these things, you may “afford” a simpler job.

A less stressful work and one that provides you with more time to go walking or jogging or playing golf – is something that can improve your lifestyle without it costing you a fortune.

* Do not acquire debts. It will mean that have to work harder later on just to pay back the debt and you cannot enjoy the important things in your life.

Question:   As people’s income increases, and they can afford more, goods and services that were previously a luxury is now considered a necessity. One must be careful against this.

Connie:  As people get older and their children move out of the house (and their pockets), they can in afford a more luxurious lifestyle.

It will then be difficult to scale down when you retire.

The same thing happens when people change jobs and they withdraw retirement provisions and use the money for a well-intentioned priorities such as to pay off your house.

With the mortgage out of the way, you can improve your lifestyle, but when you retire, you will in any case have to start doing the things I mentioned above since your retirement savings will be too little.

To start living a simple life before a forced retirement age, will mean that you enter into a mini-retirement.

A lot of people will not understand what you’re doing.

Question:  It’s always surprising when a senior person in an executive position resigns and says he will pursue his own interests.

Connie:  Maybe he can afford to downgrade early, but it also means that he is walking away from the security he had. Usually such a person begins a second, but quieter career. Something simpler.

Or the person may get involved at the church or a charity.

This also applies to those who are about to retire.

If you can start implementing such an easier lifestyle, it might mean that you might have more to give to the less fortunate.

And if your stress is less, you will in any case live a longer, happier and healthier life.

Why not?

In some cases, it may just be important to ensure that you enjoy your work and you do not work to live.

The post The issue of a simpler lifestyle first appeared on PC Bruwer & Partners / Vennote.

Medical bills can take a large portion of your income.  Ansja Ferreira from PC Bruwer and Partners gives advice on how to save on medical expenses.

With a sore head and sore throat, you walk into the pharmacy with a prescription in your hand. The doctor has diagnosed you with an upper respiratory tract infection and you are sure that your medical aid will cover the antibiotics, cough syrup and painkillers. You are not prepared when the pharmacy assistant informs you that your medical aid day-to-day benefits for the year are exhausted. Now you have to pay for everything and when you walk out of the pharmacy you are R600 poorer than you were. This is money that you have not budgeted for. This time of year especially, many people can relate to this situation. Suppose a family of four fall sick together and it is necessary for everyone to go to the doctor. Depending on the diagnosis and the drugs that are prescribed, the doctor visits will cost possibly between R700 and R800 and the pharmacy account can easily be between R1 000 and R2 000. These amounts are only estimates and may be more or less. This is money that a person usually does not budget for at all. People then use their credit cards or get into debt to cover these costs. It often happens that people’s medical fund day-to-day benefits are exhausted first and it coincides with other major expenses at the end of the year like Christmas presents and family holidays. It could lead to a big money predicament.

To save money, expenditure must be reduced. It therefore makes sense that you should try to save on medical costs.

Use generic medications

When a doctor gives a prescription for a consultation, the patient can usually choose between a branded product and the generic version of that item at the pharmacy.

A pharmacist, Kenny Baker, explained that generic drugs are produced and distributed without patent protection. Generic medicines must contain the same active ingredients as the original formulation.

The generic drug must be identical or within acceptable bio-equivalent limits as the branded product, in terms of pharmacokinetic and pharmaco-dynamic properties. The generic drug must be identical to the brand name product in respect of dosage, strength, route of administration, safety, efficacy and intended use.

In most cases, generic products are available once the patent protection has expired on the original product. When generic products become available, market competition often leads to substantially lower prices for both the original brand name product and the generic forms thereof.

A brand product patent usually expires after seven to twelve years.

It is important to note that the developer of the original brand name product possibly paid billions of dollars or Euros on research and development of a new product and these costs must be recovered even before the patent expires. These costs are not applicable to manufacturers of generic medicines and therefore it is considerably cheaper than the brand name products.

Each person is unique and may respond differently to medication. Your doctor and pharmacist can provide guidance on the use of generic medications.

Avoid unnecessary doctor visits

It is not necessary to go to the doctor for every trivial thing. To only go for a series of physiotherapy treatments just because you want to receive a back massage will also exhaust your medical aid’s day-to-day benefits very quickly.

Consult your pharmacist

The pharmacist can often prescribe drugs that can help. You can thus save on the general practitioner’s fees and prescriptions.

The pharmacist can also refer you to a doctor when he considers it necessary. Some pharmacies also provide clinical services and do blood pressure readings and blood sugar tests at a minimum cost.

Keep records

It is a good idea to keep track of everyone in the family’s illnesses and health problems. Create a file for this purpose and write down dates, symptoms and drugs that were used for treatments. Write down what medical tests the person already had and what were the results thereof. Next time you visit the doctor, you can keep the doctor abreast of all previous treatments. Allergic reactions to bee stings and insect bites, food allergies, medications for which a person is allergic and health problems such as asthma, epilepsy, diabetes, should be recorded. By providing this background history to your doctor, unnecessary tests and extra costs can be eliminated and the diagnosis of a condition can be done as soon as possible.

Keep all your receipts of medical bills that you pay out of your own pocket. It can include accounts from doctors, including specialists and pharmacy bills. If you add all of this up, you might be surprised how much money you actually pay out of your own pocket for your medical expenses.

Prevention is better than cure

One of the most effective ways to reduce your medical costs is to have a healthy lifestyle. This includes to have a healthy weight, exercising regularly and to eliminate unhealthy habits like smoking and excessive use of salt. Try and boost your immune system. Stay out of the way of people who are obviously sick. A good multi-vitamin can help to strengthen your resistance to disease.

Eat a balanced diet. A diet that is rich in fruits and vegetables contain essential vitamins and minerals needed for to gear our bodies against infections, diseases and to help it fight free radicals in the body. Our bodies need rest to recover from the stress of daily life and to restore our vitality.  A regular exercise program of at least 30 minutes three times a week helps us to build a strong immune system, get rid of stress and health problems such as high blood pressure. It is also important to drink enough water. Listen to your body. Customize your emotional and spiritual wellness. Make a little time for yourself every day. At the beginning of the year go for a full medical examination and do all tests and major investigations. This allows problems to be identified early, before it becomes serious and treatment costs become higher.

A balanced lifestyle

Look after your health because it is a precious gift. If you do not live a balanced life, it can later cost you dearly. The cost of an operation, such as a heart bypass for a person who may have been smoking, have high cholesterol and do little exercise, can be very high. Such a person may also have to stop working and the possibility that he could even die, is not excluded. Would it not be better for that person to start living healthier lives, to follow a balanced low fat diet, stop smoking and start exercising?

Keep immunizations up to date

Take your baby regularly to the clinic for a general examination and the necessary vaccinations. Make sure that your toddler’s immunizations against childhood diseases and other dangerous diseases are up to date.

Flu-injections before the flu season can also help. If you know that you are going to a malaria-invested area take the prescribed malaria pills. If you are planning a trip abroad, always make sure that your immunizations are up to date and you have preventive measures for your specific travel destination. Travel insurance that includes medical cover is also very important if you want to travel abroad.

Invest in a nebulizer

If you or your children are likely to get bronchitis, asthma or chest complaints, feel free to invest in a nebulizer. Some schemes even pay for it. A nebulizer dispenses liquid medicine into fine droplets that are released into the air. The patient can breathe them in through a mask that fits over the patient’s mouth and nose. This mask comes in adult, child and baby sizes.

Check your medical bills

Open a file for each year’s accounts and manage them. Check your medical bills for errors. Everyone makes mistakes. See if the report is accurate and check the date and services rendered. Errors and wrong computer codes easily sneak in. If you think you found an error, ensure that they are corrected immediately. Also make sure that claims are submitted to your medical aid, otherwise you are responsible for the payment thereof.

Do not take chances with your or your family’s health

Please do be penny wise and pound foolish. Don’t give prescription medication for one person to another. This can be dangerous. Health is more important than money.

Do not take chances with your or your family’s health. If it is really necessary, make a doctor’s appointment for you or your child.

Register your chronic condition to your medical fund

Chronic conditions such as diabetes, depression, epilepsy, blood pressure can be registered with your medical aid. You can claim chronic medication that does not affect your day-to-day benefits.

Build a nest egg for medical emergencies

Build a nest egg that you can use for unforeseen medical expenses when your medical fund is exhausted or for large deductibles or medication that is not covered by your medical aid. Many people have noticed that their medical fund’s day-to-day benefits will be exhausted before the end of the year. If you already notice this early in the year, you can pay an amount each month into a savings account to pay for medical expenses that will not be paid by your medical aid.

Deduct your medical costs from tax

According to PC Bruwer and Partners’ Tax Guide 2024, taxpayers may deduct medical aid contributions from taxation, but it is limited to an amount of R364 for the first two members and R240 for each additional member. Further contributions that are not specified accordingly can be deducted along with other medical expenses according to a calculation by SARS. Disabled persons may deduct all medical expenses from tax. According to the SARS website, a person with a disability is broadly defined as a person with a moderate to severe restriction on a person’s ability to perform daily activities because of a physical, sensory, communication, intellectual or mental disability that lasts than longer than a year and is confirmed by a duly registered medical practitioner. A form ITR-DD – confirms the diagnosis of disability for an individual taxpayer, and is available on www.sars.gov.za and must be completed in with consultation of a registered medical practitioner.

Medical aid funds: consider your options

Request quotations from different schemes and study each offer. The cheapest is not always the best. It is necessary to annually evaluate your medical aid. If you find that your day-to-day benefits have been used in early in the year and the rest of the year you have to pay all day-to-day medical expenses, it’s time to reconsider your options.

The post Save on medical expenses first appeared on PC Bruwer & Partners / Vennote.

Connie Bruwer from PC Bruwer and Partners gives advice on this important topic.

A reader wants to know how he can save costs on the administration of his estate. He and his wife are married under a prenuptial agreement. Both their wills state that all property of the deceased are bequeathed to the surviving spouse. Is there no way that the cost of administration of the estate can be reduced or be eliminated? It seems unreasonable that the surviving party have to incur a lot of expenses to retain his or her property. Your question touches on quite a few issues and I will give brief attention to the most important.

• Will

The fact that you are married under a prenuptial agreement does not mean that you are obliged to have separate wills. You can also have a joint will. Similarly, people who are married in community of property can each have a separate will who deals with his or her half of the joint estate. It’s your choice.

• Estate Tax

Inheritance tax is a huge cost and it makes sense to plan for it. Do not plan how money will be made available by means of an additional life insurance policy before you have even looked at ways to avoid taxes in the first place or to reduce it so that you really do not need an additional life insurance policy.

On the transfer of assets between spouses – and this includes partners in any form – estate duty is payable. Something which you have to note is that the survivor, after he or she has inherited, with an enlarged estate, will probably qualify for inheritance tax. Inheritance tax is payable on an estate with a gross asset value of more than R3.5 million and is charged at 20%. Everything you own is taken into account for this, including your policies.

• Capital gains tax

Your death is considered an event that can result in capital gains tax (CGT). A transfer of assets takes place and your capital value has increased. The capital gains rate for individuals is 40%. There is an annual exemption of R30 000 that becomes R300 000 in the year of a person’s death. A primary residence with a capital gain under R2 million is also exempted from CGT. Estate tax is only levied after CGT is taken into account, but although estate tax is just above the limit of R3.5 million, CGT is payable in all cases where applicable.

• Transfer fees and duty

The property that one of you owns, will have to be transferred in the name of the surviving spouse – if the property belonged to the deceased. Then you will have to pay the lawyer’s transfer costs. Duty is usually not addressed.

• Administration costs

The deceased’s estate needs to be administered. The law allows that the administrator may charge a rate of 3.5% on the gross asset value of the estate. Please note, may charge, not to charge. Depending on the complexity of the estate and the willingness of the administrator, you can negotiate about the costs. My suggestion would be that you enter into a business agreement with your auditor to administer your estate against a reduced rate. Usually you can do this if this institution also drafts your will and do your estate planning.

• Ante nuptial contract

You do not mention whether you are married with or without accrual. If you are married with an accrual agreement, the one with the smallest growth in his estate will have a claim against the one with the largest estate.

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