Buy online
There’s a retirement gap in South Africa that is as, if not more, significant than the life insurance gap. A reported 86% of South Africans don’t have a retirement plan and when people do retire, a third experience financial strain just four to five years into retirement. By simplifying retirement advisers can ensure their clients are financially comfortable and prepared for their later years.
Break down the big numbers
It’s quite hard for clients to deal with the big numbers retirement planning uses. Consider a 30-year-old who needs around R15 million in savings to maintain their lifestyle and has another 30 years to save. When you are used to dealing with monthly income and expenses, these numbers and time frames are too far removed from the reality of daily life. Add in the uncertainty we all deal with on a daily basis and planning for 30 years ahead can seem a futile exercise because so much could change.
The fix? Make the figures needed in retirement monthly and annual numbers.
If your client has a monthly and annual budget focus, break retirement savings needed into this. For example, work out a budget for 30 years from now with an inflation assumption. That gives a client actual numbers to work with that fit into their frame of reference.
Emphasise the need for clear retirement goals
Advisers need to show empathy and understanding around client’s circumstances and the high cost of living that can take more than a fair share of income. But you also need to stress to your clients that clear goals must be set for retirement. This is a “be kind but firm” moment because there can come a time when it is too late. Without definite objectives retirement will be a financial struggle.
Retirement goals need to have:
- A timeline, such as an expected date for retirement
- Amounts needed for living, medical and other expenses when a client is retired
- Investment plans with realistic return assumptions
- Investment products including RAs, TFSAs, pension plans and discretionary investments
The rapid rise in life expectancy caught many of today’s retirees off guard. While the increase may not continue as rapidly, there is as yet no clear longevity trend so planning for a long life after retirement is a must.
Advisers can also help clients allocate some funds for unexpected expenses and balance their budgets so emergencies don’t crowd out or use up savings funds that are allocated for retirement goals.
Debunk retirement myths
Share the truth about retirement costs and experiences so clients know what they are up against.
Myth #1: My expenses will go down in retirement so I need less to live on
When retirement age was 65 and life expectancy was 65 it was true. It is not true today. Medical costs can and usually do increase, retirees don’t get inflation breaks so food, clothing, entertainment and more all increase. The FNB survey found that 74% of retirees reported a higher cost of living in retirement than expected.
Myth #2: I won’t need to spend on big ticket items
A 65-year-old has another 15 to 20 years life expectancy, which means many big ticket items including a car will need to be replaced. Changes in technology may also mean significant capital outlays, including mobility aids such as electric scooters and wheelchairs.
Myth #3: My family expenses will go down
20.6% of South African households were headed by older persons in 2024, according to Stats SA. FNB survey respondents said family commitments for the over 60s included supporting grandchildren and adult children financially and having adult children move back home. 9% were also supporting their elderly parents. Net effect: retirees are spending more on their family than expected.
Make products part of the conversation so clients become familiar with them
The FNB survey found that successful retirees were more likely to have formal retirement savings products such as retirement annuities.
“Over-60s without long-term retirement vehicles are two to three times more likely to experience worse-than expected outcomes in retirement.”
When introduced in one session, retirement products are confusing, especially annuities. First, clients have retirement annuities to save for retirement then they take an annuity to fund their retirement that may or may not pay them a guaranteed income for life. To a non-industry specialist this is confusing “annuity speak.”
Introduce products one at a time with clients so they have the time they need to become familiar with what products are available and would be appropriate for them. You can use newsletters for this as well – explaining the different products makes an excellent topic that can be revisited frequently.
Make clients aware of their debt-to-income ratio
The 2026 Debt Busters Money tracker found that three out of four middle-aged respondents (35-44 years) are spending more than 30% of their after-tax income on debt. This makes it hard to save and almost impossible to retire comfortably because there just won’t be enough saved. With no or low debt there is a lot more to save.
Advisers can help clients work out their debt-to-income ratio so they can see how much they are spending on servicing and repaying debt and how much is left for living costs and saving. The average debt to gross income for South African households is over 50%. Debt-to-income ratios of around 30 to 40% are considered healthy and manageable, higher than that is a cause for concern that you and your client can work on lowering to free up funds for retirement savings.
Make retirement about more than money
Although many retirees take on extra work and start side hustles for a little extra cash, this also gives many a sense of purpose in their later years. Having goals and plans for retirement ensures money doesn’t overwhelm or become all of the conversation.
Check in on retirement planning regularly
This is a must to keep your clients retirement plans and ideas up to date and relevant. Retirement has so far surprised. Those who retired 60 years ago didn’t expect to live much longer after retirement. What will retirement in 60 years look like? None of us can be expected to answer this question but we can keep updated on possible trends to help clients keep retirement plans relevant with these and the client’s personal goals and circumstances.
When clients are nearing retirement age start working with the technical matters such as when to move compulsory savings to annuities, how to invest for preservation and growth and whether or not to allocate specific savings for specific expenses such as an RA for medical costs. You can read more in How to help your clients make the right annuity choice.
Clients can retire in comfort
Retirement is challenging and the annual surveys continue to show dismal numbers. But there are also encouraging findings including that people are looking for advice on how and where to save, and saving more. It’s not all doom and gloom on the retirement front and with fresh, flexible approaches to retirement planning your clients can retire in comfort and style.