Why a one size fits all retirement plan could be your biggest risk
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
No two retirements are the same, and your plan shouldn’t be either.
Retirement is too important to leave to chance or to 'averages'.
When it comes to retirement planning, there’s no shortage of general rules:
You need 75% of your final salary.
Aim for R5 million by age 65.
Withdraw no more than 4% of your capital each year.
These rules can provide a rough starting point, but relying on them too heavily may be the biggest risk to your retirement.
If there’s one thing you should know, it’s this: No two retirements are the same, and your plan shouldn’t be either.
The problem with retirement shortcuts
Rules of thumb, calculators, and averages can be helpful but only up to a certain extent. They are based on simplified assumptions that often overlook key personal factors such as:
Healthcare needs;
Debt in retirement;
Support for adult children or dependants;
Legacy goals or estate complexity; and
Tax structuring and investment mix.
Even small differences – like whether you’ll travel frequently, support grandchildren, or live in an expensive area – can significantly alter your retirement income needs.
Case in point: Two clients, same income – very different needs
Consider two individuals, both earning R50 000 per month and planning to retire at 65.
Client A:
Has no dependants
Has paid off their mortgage
Wants a simple, quiet lifestyle
Is in good health with comprehensive medical aid
Client B:
Is still supporting two adult children
Has a small mortgage balance remaining
Wants to travel every second year
Has a chronic medical condition
A generic retirement calculator would treat these clients the same. However, their actual retirement capital needs could differ by millions of rands.
This is why personalised planning is not optional but essential.
Why many people are misled by the ‘average’
It’s easy to assume that if you contribute to your company pension fund, invest a little on the side, and follow a few standard rules, you’ll be fine.
But averages don’t tell your story:
The “average” life expectancy might be 76, but many South Africans live well into their 90s.
The “average” inflation rate might be 5-6%, but private medical costs increase closer to 9-10% each year.
The “average” annuity withdrawal might be 5%, but without an extensive plan, that could deplete your capital prematurely.
Relying on averages creates a false sense of security and, by the time you realise it, the options to course-correct may be limited.
What a personalised retirement plan should include
A comprehensive, independent retirement plan should consider:
Your desired lifestyle: Including travel, hobbies, home maintenance, and family needs.
Longevity assumptions: Planning to live to 90 or beyond is becoming increasingly common – and necessary.
Healthcare realities: Factoring in medical aid costs, gap cover, and long-term care.
Estate and legacy intentions: Ensuring your assets are transferred efficiently and in line with your wishes.
Withdrawal strategies: Managing living annuity withdrawals or blended income solutions.
Tax efficiency: Structuring your income in the most tax-advantaged way possible.
What if you’re already retired?
Even if you’re already drawing a pension, it’s not too late to refine your plan:
You can reassess your withdrawal strategy to ensure long-term sustainability.
You can optimise your asset allocation to balance risk and growth.
You can review your estate and update beneficiary structures.
You can plan for evolving healthcare needs.
The key is to stay proactive, not reactive.
Where to begin?
If you’ve relied on retirement formulas or rough calculators in the past, don’t panic. Instead, take these steps:
Get a personalised retirement income projection that takes into account your specific lifestyle, age, and health status.
Stress-test your assumptions under different inflation and market scenarios.
Work with a certified financial planner who is fully independent and not product-biased.
In conclusion
Retirement is too important to leave to chance or to “averages.”
A one-size-fits-all approach might get you part of the way there, but if you want a retirement that truly works for you and your family, you need a plan that’s built around your life, not someone else’s.
