October 2026 Finance Newsletter: Surviving Retirement

Planning your finances after retirement can be difficult and emotional. One way to feel more in control is by mapping out your short and long term financial goals so that you can make your pension last as long as possible.

Put your finances in survival mode

• Minimise your living costs

  • Cut all luxury items out of your budget.

  • Pay off your debt to save on interest

    • Pay the debts with the highest interest rate first. This will usually be your credit cards and personal loans. 

  • Measure your monthly cash flow

    • Ask our financial team to help you create a cash flow spreadsheet.

• Know how much you will receive after tax

  • You will receive one exemption of R550 000 for all lump sum payouts in your lifetime, including severance pay and retirement lump sums.

  • After the exemption, tax is calculated as follows:

Taxable income (R)	​Rate of tax
1 – 550 000	0% of taxable income
550 001 – 770 000	18% of taxable income above 550 000
770 001 – 1 155 000	39 600 + 27% of taxable income above 770 000
1 155 001 and above	143 550 + 36% of taxable income above 1 155 000

• Know how you are going to spend your pension payout.

  • Have a survival mind set. You will have to make some changes.

  • Use your bank statement to list all your monthly expenses.

  • Remove any expenses that will fall away once you are home

  • Add any new expenses that will apply once you are home.

  • Look for any luxury expenses that you can cut out.

  • Rank your costs according to your basic priorities

    • Needs

    • Wants

    • Financial security funds, like short term insurance, life insurance or retirement annuities

    • Investment funds

Depending on how much funds you have available, you will need to slowly cut these costs from bottom to top.

Remember: the lower your costs, the longer it will take before you need to cut each cost level.

• Now set spending targets for yourself and monitor your spending daily or weekly. 

• Understand how long you can survive on your current funds if you spend according to your spending targets.

• Do everything in your power not to exceed your spending targets.

• Continually update your spending targets as your needs and funds change.

• Get your family to commit to stick to these spending targets as well.

• Know what you can sell and how much you owe

  • List all assets that you can sell if times get desperate. This will usually include your house (if it is paid up), your car (if it is paid up) and any investments or savings.

  • List all your debts. This will ordinarily include mortgages, financed vehicles, overdraft facilities, credit cards, personal loans, store accounts, etc.

  • Obtain the latest statements from your credit providers and include the most current details, including outstanding balance, interest charged, repayment term and monthly instalment, on the budget assessment.

  • Check on which accounts you have credit life insurance and put in a claim to pay off as much of your debts as possible.

  • For your remaining accounts, make payment arrangements with your credit providers. If they agree to temporarily extend the repayment term, this will decrease your monthly instalment.

  • Prioritise    paying off the debt with the highest interest rates first. This will usually be your credit cards, personal loans, and retail accounts.

  
  

• Set short and long term goals

  • Pay off your unsecured debt (everything except houses and cars) within 12 months.

  • Do not make more debt.

  • Continue to put money into an emergency savings account each month.

  • Make sure your lifestyle matches your cash flow.

  • Always have a backup plan in case you don’t find replacement income.

Achieving your financial goals will require discipline and commitment. Put all your focus on achieving your short term goals.

Using your retirement payout

• How a preservation fund works

  • This is a parking place for your pension or provident fund until you are sure you know what to do with your retirement money. Be aware that this might be expensive moving to a preservation first and then to an annuity.

  • Unlike a retirement annuity, you cannot continue to make monthly contributions to a preservation fund.

  • Remember that disability and life insurance will fall away.

• How a retirement annuity works

  • Life / Traditional annuity

    • You will receive a monthly income that starts at retirement and ends at death. 

    • The income will be a fixed amount, as it is determined by the interest rate at the time of your retirement.

  • Living annuity

    • Your capital will be invested in underlying investment vehicles, which can be amended annually.

    • You will receive a monthly income that starts at retirement and ends at death.

    • The income can vary, as it is linked to the performance of the investments.

    • The income will keep paying out after your death to your appointed beneficiaries.

    • The monthly income level may vary between 2.5% – 17.5% of the net investment and can be amended once a year.

Conclusion

Retiring is not easy, but you can survive it by being realistic, cutting out all luxuries and focusing on achieving your short term goals. By knowing what to expect, you can try to avoid the hurdles before they arrive, and have a stress free retirement.