Polyjobbing could reverse SA's retirement fortunes

Old Mutual recently released its 2022 Savings and Investment Monitor. This annual survey explores the shifts in attitudes and behaviours of the country's working metropolitan households to better understand the savings behaviour and financial perspectives of employed South Africans.

One of the more interesting findings in this year’s report is that no less than 51% of respondents are “polyjobbing”, up from 47% in 2021.

What is “polyjobbing”?

Polyjobbing (also known as the “side hustle”), simply put, is having multiple income streams, usually a result of having a permanent, salaried career and supplementing that income with a second job or self-built business. 

“Polyjobbers deserve to be recognised and applauded,” says Lizl Budhram, personal finance head of advice at Old Mutual.

“They are proving their ambition and commitment to take control of their financial futures. By creating their own opportunities, they are showing how serious they are about getting ahead in life. What is vitally important though, is that polyjobbers are smart about generating income and using it to improve their long-term financial outlook.”

Long-term thinking starts with short-term budgeting. 

According to Budhram, this starts with having the right mindset about your additional income and understanding the balance between your different income streams.

“If you are a polyjobber, you take your finances seriously and are trying to maximise your time and potential. But if you are going to work that hard for your money, you should ensure your money works just as hard for you.”

As a polyjobber, you likely have a fixed income stream that offers more security, such as a salary, and then one or more additional income streams, which might fluctuate and not be as secure. You need to understand this balance and budget accordingly. 

“Then there’s the question of what security means to you as an individual. There have been so many uncertainties in our economy lately and you should consider whether your fixed income is as secure as you think; or is it time to focus on your secondary income stream and turn that into your primary income?”

To summarise: 

• Consider how your income streams are balanced, and 
• Consider how flexible and stable they are.

Once these short-term budgeting questions have been answered, it’s time to look ahead and use your additional income to secure your long-term financial future.

Securing your financial future 

SA has a dismal record when it comes to saving for retirement. According to the latest figures from Stats SA, only 6% of South Africans can afford to retire comfortably and maintain their standard of living. This is despite retirement annuities offering one of the most secure ways to save and providing significant tax benefits. 

“This is where polyjobbers have a unique opportunity to buck the trend and secure a brighter financial future for themselves and their families,” Budhram says.

“Even if you have an existing retirement annuity, chances are it’s not enough — the 6% statistic supports this. But if you can invest a portion of your additional revenue instead of spending it, it will bear fruit in the future.”

For instance, the Old Mutual Max Investments Optimal Retirement Annuity helps you get ahead by offering:

• Tax efficiencies, 
• No penalties, 
• Flexibility, and 
• Five-year and annual boosters thereafter.

“That’s just one way in which saving today can make a big difference tomorrow,” says Budhram.

Other considerations for polyjobbers

When polyjobbing, other aspects of your financial planning also warrant consideration: 

• Stay tax-smart: One of the most critical considerations is tax. It’s essential to keep your tax administration and liabilities in mind and to understand the tax implications of your additional revenue stream. 

• Manage your expenses: Secondary income streams are generally not as secure as your permanent job. You are likely to have good and bad months, so make sure you consider the bad ones before committing to any significant expenses or debt. Ask yourself: if my secondary income stream should suddenly dry up, will I still be able to meet my financial commitments?

• Check in with HR: Rules around polyjobbing will differ from company to company, so make sure your entrepreneurial activities are not putting your primary income at risk. Check with HR and make the necessary declarations to keep things above board. 

The right advice can make all the difference

Polyjobbing puts you in control of your financial destiny, so make sure the income you work hard to generate is put to work for you. The best way to do this is to speak to a financial adviser. They can help you maximise your income, structure your tax benefits and boost your savings potential by creating a financial plan that considers all the variables and is flexible enough to adapt to life’s twists and turns. 

Speak to your financial adviser, call 0860 60 60 60 or visit Oldmutual.co.za

This article was paid for by Old Mutual.

^{The material is not intended as and does not constitute financial or any other advice. The material does not take your personal financial circumstances into account. For this reason, it is recommended you speak to an accredited financial adviser to consider all your options and draw up a plan to achieve your financial goals.}