About to retire: Plan for the future

Many people in retirement simply neglect to continue planning. They see their retirement date as an end to planning for their future. It is a new journey, but a more difficult one as mistakes must be avoided. The Covid-19 pandemic and the Zuma years of government prove this.


Bruce Lee, a Hong Kong actor, martial artist and philosopher once said:

“A goal is not always meant to be reached, it often serves as something to aim at.”


This quote was used by retirement planning financial adviser, Estee Visser, in a Linkedin post, who then also added one of her own:

“If you reach your goals, you’re not trying hard enough.”


The first question you need to ask is: Do I want to retire?


There are many reasons why you may want to or need to avoid retiring. Alexander Forbes research on what is called “normal retirement age” shows that reasons given by employees are often not logical.


In research done in 2013 and again this year by Alexander Forbes principal consultant, Belinda Sullivan, it was found that the challenge to retirement age is not so much the Pension Funds Act, but employers, who incorrectly see the cost of extended retirement as a perceived issue.


At that time the average retirement age was 61.4 for 2019 (up on 60.3 in 2012) showing some improvement. But it still means that most people will still be retiring early, for whatever reason as the average normal retirement age for private retirement was 63.


Sullivan says the reality is that individuals are retiring earlier, but the irony is individuals have more time to live, but less time to save — a shorter working life, lower expected future returns and lower incomes in retirement, which now means that pensions need to last much longer than previously anticipated. Sullivan says individuals now need to work as long as possible to fund their lifestyles post-retirement.


More than half of the 37 countries that make up the Organisation for Economic Co-operation and Development (OECD) have increased the retirement age from 65 to 67, with the longer-term intention to increase this age beyond 67 to target 75 by 2050.


Sullivan says arguments in South Africa for later retirement include:


  • Evidence suggests that people who work later are least likely to die early. However, certain jobs do not lend themselves to later retirement.

  • Increasing retirement age or retiring at 65 rather than 55 can almost double a member’s replacement ratio. Retiring four years earlier means a reduction of about 10% in post-retirement income.  This is significant given that the average replacement ratio at retirement is 26.7%;

  • members with longer service, say 30 years or more, can expect higher benefits at retirement.  A total of