Five retirement mistakes that could cost you your financial freedom
Don’t treat retirement as a once-off event and a finish line. It’s a new phase of life, with evolving opportunities and risks.
By Wouter Fourie (CFP®)
Director of Ascor® Independent Wealth Management.
Wouter Fourie is Past winner of the FPI Financial Planner of the Year competition and the co-author of The Ultimate Guide to Retirement in South Africa
Review your plan at least annually with your advisor. Adjust drawdowns, reallocate investments and stay proactive.
Many South Africans picture retirement as a time of freedom – complete with long lunches, family holidays, hobbies and rest following decades of hard work. But for too many, that vision fades under the weight of financial pressure.
The truth is, retirement is not something you stumble into successfully. It takes clarity, intention, and the right kind of advice. Unfortunately, we’ve seen that most retirement failures have little to do with market performance and a lot to do with avoidable mistakes.
In our more than 20 years of counselling South Africans, we’ve identified five of the most common – and costly – retirement mistakes, along with tips on how to avoid them.
Underestimating how much you’ll really need
Many people approach retirement planning with vague targets – R5 million, R10 million, or “whatever I can save.” But retirement is about income, not just capital.
Failing to quantify your real retirement income needs and adjusting them for inflation, healthcare, lifestyle changes, and longevity can lead to a shortfall that’s hard to recover from.
What to do instead: Work with a qualified financial planner to calculate your required monthly income, adjusted for inflation over 25-30 years. Only then can you accurately determine your retirement savings target.
Retiring too early without testing the numbers
Early retirement sounds appealing but retiring at 60 instead of 65 can increase the amount you need to save by as much as 50% or more. It also increases the risk that your capital will be depleted too soon.
Many people retire early due to burnout, peer pressure or severance packages without considering the long-term effects.
What to do instead: Stress-test your plan using various retirement ages, withdrawal rates, and market return assumptions before committing.
Ignoring the cost of healthcare in retirement
Healthcare inflation in South Africa has consistently outpaced CPI. This means medical aid premiums and out-of-pocket expenses will likely become one of your largest costs in retirement.
Many retirees downgrade or cancel cover at exactly the time they need it most – often due to poor pre-retirement planning.
What to do instead: Build escalating healthcare costs into your retirement cash flow projections. Make provision for gap cover, chronic care, and long-term support needs.
Taking advice from product sellers instead of independent planners
One of the biggest risks to retirement outcomes isn’t market volatility, it’s conflicted advice.
When advisors are incentivised to push certain products or work for institutions with sales targets, the advice you get may not be aligned with your best interests.
What to do instead: Work with a truly independent financial advisor – one who is not tied to a product provider and who can offer objective advice based solely on your needs.
Thinking retirement planning is a once-off event
Many people treat retirement planning like a milestone: “I’ll get a plan in place before I retire, and then I’m done.” But retirement is not a finish line. It’s a new phase of life with evolving risks, opportunities and decisions.
Your plan should adapt as:
Markets shift;
Your health and needs evolve;
Tax laws change; and
You encounter unplanned expenses or legacy priorities.
What to do instead: Treat retirement planning as a living process. Review your plan at least annually with your advisor. Adjust drawdowns, reallocate investments, and stay proactive.
If you’re planning to retire in the next 5-10 years
Now is the ideal time to:
Quantify your target income;
Review your current capital vs. what’s needed;
Evaluate early retirement scenarios; and
Plan for healthcare, taxes, and estate needs
Even if you’ve already retired, you can still optimise your drawdown strategy, align your investments, and adjust for longevity risk.
Retirement can and should be a time of fulfilment and peace, not filled with regret or worry. Avoiding these mistakes is possible with the right insights and the right support.
If you’re serious about retiring well, start with a conversation. And if you’re already on the journey, it’s never too late to make smarter decisions.
The Ultimate Guide to Retirement in South Africa offers excellent tools and principles for building a robust plan. For personalised guidance, visit www.ascor.co.za. We’re here to help you avoid costly mistakes and build a retirement you can trust.
