How do you know you are ready to retire?
How do you know you are ready to retire? It is no longer a question of how old you are, but of how much you have saved to ensure you can have a comfortable retirement.
Siphamandla Buthelezi, head of platforms at advisory firm NMG Benefits, says there is a moment in every career when you should stop asking, 'How much have I saved for my retirement?' and start asking, 'What now?'.
'Retirement is not the end of your financial journey but the beginning of a new one. While most of us spend decades building up our retirement savings, far fewer take the time to understand how to turn our savings into a reliable income, navigate new tax realities and properly plan our estate.
'This is why people approaching retirement must ask the right questions. The ideal time to start putting everything in place is five years before you retire. This enables you to make informed decisions, iron out any admin issues and understand the impact of your choices.'
Here are the most important questions you should ask your financial adviser:
What happens to my savings?
Is it better to opt for a living annuity or a life annuity? Should you take a portion as a lump sum? Each comes with different income options, tax implications and risks.
Buthelezi says If you choose a living annuity, you will have to decide on a realistic monthly drawdown rate and ensure your investments can keep up with inflation.
'A life annuity, on the other hand, offers guaranteed income for the rest of your life but comes at the cost of flexibility.'
ALSO READ: South Africans are living longer and need to plan for longer retirement – here's how
How will fees affect my income?
Platform administration, investment management, and advice fees can significantly reduce your net income over time.
'Every rand spent on fees is a rand that does not support your lifestyle, and therefore, you should understand what you pay for and whether it is reasonable.'
Are there tax implications?
If you are behind on your taxes, Sars will deduct the outstanding amount from your savings before you receive a cent, Buthelezi warns.
'In addition, any lump sum you may take is taxed according to a sliding scale, although the first R550 000 is tax-free. Monthly drawdowns from living or life annuities are taxed just like any other income.'
ALSO READ: Poor financial literacy about retirement costing SA and consumers millions
What about medical aid?
Unless your employer offers post-retirement medical benefits, your membership ends when your job does, he points out.
'Even if you are allowed to stay on your company's scheme, the portion that your employer may have been paying will likely fall away, leaving you to foot the full premium just as your healthcare needs start to increase.'
Apart from the monthly premium, you must also plan for gap cover and chronic condition benefits.
Does my will reflect my wishes?
Buthelezi says you must ensure your will is up to date and your beneficiary nominations align with your intentions.
'If you are concerned about your future decision-making capacity, you should consider giving someone power of attorney to make financial and healthcare decisions on your behalf. This should not be given lightly. You must fully trust the person and understand what you are authorising.'
ALSO READ: Looking for a retirement property? Here's what to look for
Will my lifestyle be sustainable?
A good rule of thumb is that your retirement income should equal 75% of your final salary, assuming that major expenses, like bond and car payments, have been settled.
Buthelezi says this is where a detailed financial and lifestyle audit comes in. You must map out exactly what your income will be, what your expenses will look like and whether there are any shortfalls.
He notes that retirement is not just about stopping work.
'It is about stepping into a new chapter with the confidence that your financial foundation is solid. And this process does not begin the day you stop working. It begins today, with asking the right questions.'
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Citizen
13 hours ago
- The Citizen
South Africans experiencing less financial stress, but still under pressure — survey
Overall, 63% of consumers spend more than 30% of after-tax income on debt repayments; the same ratio within the 45-54 age group is 74%. Although South Africans are experiencing notably less financial stress than they did for the past two years, with levels of financial stress returning to levels last experienced in 2022, money stress remains a significant issue for many people. According to the fourth annual DebtBusters Money-Stress Tracker which surveyed more than 27 000 respondents during May and June: 70% of respondents experienced money stress, down from 78% in 2023 and 75% in 2024. Although the extent of financial anxiety is declining, the impact on daily life remains substantial. Among respondents who said they still experience financial stress, 91% of them felt it affected their home life, 73% their work life and 73% their health. Women still bear a disproportionately higher burden of financial stress, with almost three out of four female respondents reporting feeling financially stressed. Women are around 10% more stressed about finances and 20% more stressed about work life, home life and health compared to men, although stress levels for both genders decreased by 5% to 15% across all facets of life since 2024. The shift is attributed to fewer national crises, such as less load shedding, reduced inflation and people starting to manage their finances better, allowing them to look beyond short-term survival. ALSO READ: Survey shows how economic distress erodes South Africans' savings culture Even small improvements decrease financial stress The Money-Stress Tracker worked with psychologist Andrea Kellerman, who notes that even a 5% drop in financial stress (from 75% to 70% in the past year) results in people sleeping and coping 'a bit better,' suggesting the profound impact even small improvements can have on resilience and perception. However, there are still key financial concerns. For people battling with financial stress, short-term concerns continue to dominate, with the top two running out of money before the end of the month and struggling to pay off monthly debt. The impact of interest rate increases, while still significant, subsided compared to 2023 and 2024. ALSO READ: Sarb: financial stability but financial distress in households and SMEs Different age groups have different levels of financial stress The survey shows that people from different groups have more or less financial stress: Age: Middle-aged (35 – 44 years) respondents had the most financial stress. Concerns about retirement increased for respondents older than 45 compared to 2024, indicating that this age group can now look beyond the short-term concerns which traditionally dominate. Middle-aged (35 – 44 years) respondents had the most financial stress. Concerns about retirement increased for respondents older than 45 compared to 2024, indicating that this age group can now look beyond the short-term concerns which traditionally dominate. Income: Lower-income groups are the most concerned about the impact of interest rate increases or unexpected expenses. While electricity costs are an elevated concern across all income groups compared to 2024, retirement worries are more pronounced in the upper-income brackets. People earning more than R20 000 a month remain in the group that experiences the most financial stress, often qualifying for and taking on more credit than their earning capacity allows. Lower-income groups are the most concerned about the impact of interest rate increases or unexpected expenses. While electricity costs are an elevated concern across all income groups compared to 2024, retirement worries are more pronounced in the upper-income brackets. People earning more than R20 000 a month remain in the group that experiences the most financial stress, often qualifying for and taking on more credit than their earning capacity allows. Region: Respondents from the Western Cape are the most financially concerned, surpassing Gauteng, which reported the most financial stress in 2024. The Western Cape is also where most people worry about unexpected expenses and retirement. Smaller provinces, such as the Northern Cape, Limpopo and Mpumalanga, saw significant increases in concerns about electricity costs and interest rates. The survey also investigated borrowing and debt repayment trends and found: 63% of respondents allocated 30% or more of their after-tax income to debt repayment, while 48% spend over 40% paying back what they borrowed, a level considered unsustainable. People older than 45 are under the most severe debt-repayment pressure, with 60% having unsustainable levels of debt. Respondents earning more than R20 000 a month also face considerable pressure to repay debt. This chart shows how much of their income the respondents spent on repaying debt: ALSO READ: How to minimise financial stress in your life What people are doing to combat financial stress However, the survey also shows that they are actively doing something about their financial stress: 37% of respondents reported actively cutting back on monthly spending, compared to 43% in 2022. This suggests savings fatigue has set in, Kellerman says. Seeking higher-paying or better jobs is a growing trend, with 35% of consumers exploring these options to make ends meet, compared to 26% in 2022. Younger consumers are more proactive about sticking to budgets and are almost four times more likely to seek better employment. The survey shows that 56% of the respondents are more intent on managing financial stress than people older than 35. Respondents elaborating on how they manage financial stress revealed a shift in coping mechanisms. In 2022 and 2023, people tended to seek better jobs or start a side hustle, while in 2024, debt counselling was the preferred way to relieve financial stress. Now there is a growing emphasis on entrepreneurial efforts, multiple income streams and financial independence, reflecting a move towards self-reliance and creating diverse sources of income. Benay Sager, executive head of DebtBusters, says that despite the slight reduction in overall stress, over 90% of South Africans with unsustainable debt do not proactively seek professional support such as debt counselling. 'This underscores the ongoing importance of stress-management programmes, financial education and awareness campaigns that address stigma and promote early intervention. It also highlights the need for innovative solutions to deal with financial stress, particularly those that help consumers stretch their money further.' ALSO READ: South Africans remarkably resilient despite economic challenges With less financial stress, people are sleeping and coping better Kellerman says the 2025 edition of the Money-Stress Tracker brought an encouraging insight that some might overlook at first glance: while overall financial stress levels dropped from 75% in 2024 to 70% in 2025, the impact of this change could be substantial. 'People are sleeping and coping a bit better despite elevated financial pressure. This 'disconnect' between the data and lived experience tells an important story about resilience, perception and the compounding effects of small improvements. 'It is well known that perception drives behaviour, and in 2025, that is more evident than ever. Although financial stress and pressure remain high for many, people report feeling more in control, more optimistic, as well as more willing to engage with support structures. 'However, for the first time in years, there was an overall sense of stability. The absence of large-scale disruptions such as load shedding or social unrest allowed people to regain emotional bandwidth and reframe their financial situation. With just a small decline in stress, people have begun to look beyond short-term survival.'
IOL News
14 hours ago
- IOL News
Mabaso calls on Joburg residents to safeguard RDP and social housing
The City of Johannesburg's Member of the Mayoral Committee (MMC) for Human Settlements, Mlungisi Mabaso, has made a passionate appeal to residents benefiting from government-subsidised housing to protect and maintain their properties. Image: Itumeleng English / Independent Media City of Johannesburg Member of the Mayoral Committee (MMC) for Human Settlements, Mlungisi Mabaso, has lashed out at Joburg residents who are beneficiaries of Reconstruction and Development Programme (RDP) and social housing, to protect and care for their properties. Mabaso criticised South Africans who refuse to pay for government services and those who damage and disrupt infrastructure during a site handover ceremony at the Riverside View Social Housing project, located north of Johannesburg near Fourways. "We have thousands of our people who want to be accommodated. If we can't collect rent and services, we cannot build new spaces. Everyone needs to be accommodated, and I do not agree with the notion that we should only focus on the RDP social housing programme. We need various housing solutions to cater to the needs of everyone. "Some need to be fully subsidised, and some are first-time home owners who are in the GAP market. They must be accommodated. Everyone must be accommodated according to their circumstances, and those who are called on to pay for services must do so to ensure that we can provide services in the future," he stated. The GAP market consists of workers who do not qualify for a full bond. They are subsidised by the government to buy their first home. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading On the City of Joburg's decision to find alternative accommodation outside of the CBD, Mabaso said this has been a conscious decision which ensures that everyone benefits from government social housing initiatives, including those who stay far from the city centre. "What we ought to do is to account for every cent spent on implementing our project, as this is a moving target and taxpayers' money. We can't squeeze everyone in the inner city, which is why we have decided to implement these projects outside the inner city. Some do not want to reside in the inner city. There have been quite some developments outside the inner city, and all of those are performing very well," Mabaso stated. Mabaso, alongside speaker Rufus Maswazi and CoJ Speaker, Margaret Arnolds, and Johannesburg Social Housing Company (Joshco) representatives, commended the residents of Diepsloot for not plundering and destroying a range of social housing projects, which have been launched to ensure dignity to low- and middle-class income earners. Arnolds commended Joshco and its partners for ensuring dignity to those who need it the most, adding that not everyone in the city enjoys a dignified home due to the limited government funding, which is unable to deal with the human settlement challenges in real time. "It's a great honour to be here for this groundbreaking project. Human Settlement is not only about housing, but also addressing special planning that keeps our people on the periphery. We must work hard in translating policy into progress to ensure vision for housing for all is not spoken of but implemented and realised. "This is a powerful example of the city's commitment to bringing safety and dignity to our people. It is very important that we reach out and integrate our people into spaces such as this one," she said.
The Star
15 hours ago
- The Star
How to Move from Planning to Action for a Better Retirement
The FNB retirements 2025 survey released on Tuesday in Durban indicated that most South Africans are looking forward to a retirement that offers comfort, freedom, and financial ease, but the reality for many is likely to be very different. The survey revealed a widening gap between retirement expectations and actual preparedness – just 10% are planning to fully retire at 60. The survey, which is in its third year, indicated that although more South Africans claim to have a retirement plan, very few are on track to achieve their goals. 'The survey reveals that 60% of South Africans under the age of 60 now have a retirement plan. However, financial constraints continue to hinder progress, potentially delaying contributions, leading to premature access to savings, or causing abandonment of retirement products altogether. Among middle-income earners, for example, contributions towards retirement annuities have declined from 51% to 34% as debt pressures and daily living costs take precedence. The research further highlights a growing trend – the middle class feels uncertain about their ability to save adequately and stay on track with their retirement plans.' Sizwe Nxedlana, CEO of FNB Private Segment, said that what's clear is that most people aren't ignoring retirement; they are just overwhelmed by it. 'The survey found that procrastination often stems from not knowing where to start. We see that people don't avoid planning because they don't care; they avoid it because it feels too big, too far away, or too confusing. That's why we need to meet people where they are, with tools and advice that break things down and build momentum.' Nxedlana added that funeral cover is almost universal in South Africa because people want to ease the immediate burden on family. 'But a Will does that too, and more. It's not just for the wealthy. It's about protecting your family in the long term.' The survey said that there's persistent anxiety about the rising cost of living, future health expenses, and whether their money will last. 'While younger respondents tend to be optimistic, with many expecting to replace 75% or more of their income in retirement, the experiences of older adults tell a different story. Many over-60s are working longer than planned, cutting back on spending, or relying on their adult children for support. Some retired respondents spoke of losing their sense of purpose, feeling isolated, or experiencing regret about not planning earlier.' Survey responses highlighted that public awareness is relatively high, with nearly 70% of respondents indicating they've heard of the new Two Pot system, and almost half claimed to understand it. 'Encouragingly, less than a third of survey respondents have actually withdrawn from the savings portion of their newly structured retirement funds.' Nxedlana said that the concern is that while the reform offers short-term relief, the savings pot could be seen as a default emergency fund rather than a tool for building future stability. 'However, there is some cause for cautious optimism, since 43% of those who haven't withdrawn from their savings pot say they don't plan to – which points to an understanding of keeping their retirement savings intact over time. The research also delivered evidence of a broader rethink around retirement itself. Over 50% of respondents expect to supplement their retirement income through part-time work or side hustles.' Nxedlana added that he believes this evolution reflects a generational shift. 'People aren't just looking for products; they're looking for options, guidance, and a greater sense of control. This is especially relevant given that the findings point to a shift in how and where people seek advice. Bank platforms now outrank social media and peer groups as the preferred channel for retirement guidance. Consumers are calling for lower fees, user-friendly tools, better education, and incentives to reward consistency. Our job as FNB is to provide the tools, insight, and support to help them navigate this complex journey so that they are able to turn their intentions into results.' Johnson said that there's no single fix for retirement. 'There are bite-sized steps for everyone. At FNB, we're focused on helping clients move from merely having a plan for retirement to having a good plan - and from feeling stuck and overwhelmed to taking action.' BUSINESS REPORT
