For many South Africans, semi-retirement is now replacing the “gold watch and farewell drinks” finality of the traditional retirement transition. Rather than a fixed event, people are increasingly opting for a phased, flexible work strategy – often via a shorter week or embracing another form of partial retirement from a full-time career.
If you are within 5 to 10 years of retirement, now is the time to do some planning. Effective preparation for this transition will create the foundations that will ensure both financial security and emotional well-being.
Drawing from our experience, these are the key areas you can focus on.
Clarify your retirement goals.
Before you run any numbers, you need to articulate how you want retirement to look. This is the time to consider:
- Work expectations – will you stop working entirely, or shift into part-time consulting? Specifically, will you be earning income in some form for the foreseeable future?
- Family responsibilities -will you still be supporting dependent adult children, or perhaps helping out with grandchildren?
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Lifestyle aspirations – what will you do day-to-day? Are you considering relocation to a quieter town? Do you envision travelling more, perhaps revitalising certain hobbies or special interests, or supporting community projects?
Clear goals now will enable meaningful financial planning and better emotional preparation.
Retirement model, financial projections and budgeting.
The shift from earning a salary to drawing an income from your investment portfolio requires a change in mindset. It’s important to assess how your expenses will change and a detailed budgeting exercise is important.
With your goals in mind, your financial planner can prepare a reasonable projection of your retirement plan using financial modelling. This would include:
- Retirement income projections (pensions, annuities, investment income)
- Lump-sum requirements (e.g., travel, home renovation, paying off debt)
- Asset drawdown strategies (bucket approach to ring-fence income)
- Asset allocation adjustments (reduced volatility, more income-generating assets)
Get on the waiting list for retirement villages.
Popular and well-run retirement villages especially in the Western Cape, often have extensive waiting lists – sometimes years long. Even if you’re not certain that you’ll ever move into one, it’s wise to put your name down early.
Things to consider:
- Location and proximity to family, friends and hospitals
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Facilities (security, recreation options, assisted living and/or frail care)
- Ownership structure (life rights, sectional title or full ownership)
- Monthly levies and future affordability (look at historical escalation rates to get a sense as to whether these increases are in line with inflation or exceed inflation)
Semi-retirement or “the whole deal” – both require planning.
The years leading up to retirement offer you a window for planning as you reimagine your lifestyle. Semi-retirement in particular can offer a combination of flexibility and ongoing purpose, but it does require specific preparation.
By clarifying your goals, running realistic projections and being proactive about housing and budgeting, you lay the groundwork for a fulfilling and financially secure retirement.
By Jonathan Botha, CFP®
B.Com
