BUSINESS NEWS - As a parent, there is little that can get in the way of your dreams for your child, but these dreams should not come at the expense of your own retirement planning. Imagine if you tackled your own finances with the same passion you feel for your child’s sport and extramural activities? The ultimate game plan is to be able to look after yourself in retirement, ensuring your child will not have to play substitute for your lack of savings.

Scoring your own financial goals first puts your child in the best position for the future. Too many children find themselves in the ‘sandwich generation’ – those who are caught between the financial needs of their own children and those of their parents. We’re living longer these days – if both parents are older than 60, one of them will on average reach the age of 95. This means that there will be a good innings to cover financially once retirement comes. Don’t let your child become responsible for you in your golden years; start practising better financial planning today.

You should of course give your child the best opportunities you can, but you need to make the best decisions with your available finances. Spending money on coaches and expensive equipment at the expense of retirement saving makes you a good sport in your children’s eyes, but is equivalent to choosing a short-term benefit for your child over a long-term gain.

Retirement is an expensive activity in itself. For every R4 000 needed per month, R1 000 000 is needed in capital at today’s monetary value. Medical aid will also become even more essential. A good scheme will require about another R1 500 000 in capital, to fund comprehensive cover for two until age 95.

Take an example of saving R2 000 per month for a period of 18 years (from when your child is born until they reach Grade 12), with the amount increasing according to the inflation rate and assuming an annual investment growth rate of 14%. Then imagine you stop contributing and let the investment grow and compound for another 20 years. This will make for quite a sizeable sum – you would be able to withdraw a monthly pension of R9 300 at today’s value, which would increase with inflation every year.