Transforming the Concept of Modest Wealth in Retirement Years
Retirement in South Africa is a topic that demands attention, as a growing number of retirees find themselves dealing with unexpected expenses and financial shortfalls, challenging the traditional notion of a carefree post-work life.
According to the FNB's 2025 Retirement Insights Survey, there is a significant disconnect between South Africans' visions of retirement and their current lived experiences. This disconnect is unique and noteworthy, signalling the need for a shift in the approach to retirement planning.
The key to overcoming this challenge lies in building flexibility, resilience, and realism into long-term financial strategies. Here are some practical strategies that can help South Africans achieve this:
- Leverage the Two-Pot Retirement System: South Africa's evolving retirement framework includes the Two-Pot system, which splits retirement savings into accessible and inaccessible portions. Understanding and utilising this system can provide liquidity options without undermining retirement security.
- Incorporate Diverse Investment Strategies: Including local infrastructure investments offers potential stable returns aligned with South Africa’s development goals, supporting resilience through tangible assets. Global investment diversification can protect against local economic fluctuations.
- Plan for Increasing Longevity: As South Africans are working into older ages, financial plans must support retirement income at 80 and beyond. Adapting investment strategies and withdrawal plans to longer life expectancy introduces realism to prevent outliving assets.
- Stay Informed About Taxation and Regulatory Changes: New tax policies, such as SARS seeking taxation rights over foreign retirement funds from March 2026, affect expatriates and cross-border retirees. Planning must anticipate these changes to avoid unexpected tax burdens and penalties.
- Adopt a Realistic Savings and Spending Plan: Aligning retirement savings with realistic assumptions about inflation, healthcare costs, and lifestyle changes is crucial to avoid over-optimism or underfunding.
- Utilize Professional and Industry Insights: Attending sector conferences and seminars can provide up-to-date information on regulations, market trends, and innovative retirement fund management techniques.
- Integrate Environmental, Social, and Governance (ESG) Principles: Adopting ESG criteria in investment decisions not only manages risks but also aligns with emerging industry standards and societal expectations, potentially improving long-term outcomes.
These strategies collectively enhance flexibility to adapt to life changes and market conditions, improve resilience against economic and regulatory risks, and ground financial plans in realistic expectations tailored to South Africa’s unique retirement environment.
Retirement in South Africa is not just about financial shortfalls, but about the emotional and psychological impact of unmet expectations. The misalignment between retirement aspirations and reality is a significant issue, demanding attention from the industry.
Recognizing retirement as a dynamic next chapter in people's lives that requires honest discussions and practical planning is crucial. The assumption that retirement brings financial ease is deeply rooted in the South African psyche, but this is not always accurate. The approach to retirement planning should shift from an idealized end state to a focus on practical planning and workable solutions.
Many retirees in South Africa are working longer than planned, either by choice or necessity. Many are also supporting extended family, which erodes the financial freedom they anticipated. The stories of South Africans in retirement are a reminder that retirement planning is not just about numbers, but about people's lives and dreams.
[1] FNB, (2025). FNB Retirement Insights Survey. [2] IRFA, (2025). IRFA Conference. [3] SARS, (2026). Proposed Tax Policy Changes. [4] Sovereign Trust, (2025). Seminars on Retirement Fund Management Techniques.
- In light of the disconnect between South Africans' retirement visions and experiences, it's essential for the finance industry to reconsider its approach to personal-finance management for retirement, focusing on practical, workable solutions rather than an idealized end state.
- To address the unique challenges in South Africa's retirement landscape, retirees might benefit from integrating diverse investment strategies into their personal-finance plans, such as investing in local infrastructure and globally diversifying assets, tailored to support flexibility, resilience, and realistic expectations.
