The main aim is to make your money outlast you


Retirement is of one of the greatest age milestones and financial transitions one can achieve after many years of employment service or of running their own business.

Many retirees see retirement as a transitioning from the working grind, to days of leisure and relaxation.  However, there is another shift at play—which is ending the days of earning an income, and beginning the days of measured spending.

When entering retirement, retirees need to have a clear game plan in mind on how they will manage their money, and stretch it until the end.

Even though many have planned and saved for years, entering retirement is not a time to set autopilot on your finances, but a time to understand your finances and to develop a personal relationship with your money.

These are six common mistakes that retirees make during their golden years:


Many retirees start by pursuing all the things they didn’t get to do while working—such as traveling, picking up a new hobby, or renovating their homes.

However, retirees often underestimate the amount of money they’ll spend in those first few years of retirement.  With so much extra time on their hands, it’s easy to make a lot of little purchases that add up to a lot of money over time.

To avoid this mistake, create a detailed but realistic budget and stick to it.  Be sure to work with your financial advisor to find a withdrawal rate that will stretch your money for as long as possible.

Large withdrawals

Withdrawing large sums of money from your pension can put your portfolio in jeopardy of running dry.  If you frequently withdraw large amounts of money, you may suddenly need to make major changes in your lifestyle and spending just to get by.

On the contrary, if you start out with a modest retirement lifestyle, you’ll have a much easier time sustaining it without the need for drastic cutbacks.

High-risk investments

Retirees need to consider their risk profile when looking at suitable investments post-retirement.  Unfortunately, time is limited to make up capital losses should they occur in high-risk investments.

Investing in a diverse range of medium to low-risk investments is the key to success when looking to grow wealth sustainably into your golden years.  Having a basket of asset classes that move in different directions to each other is one way to shelter wealth against market volatility.

Retirees should therefore look to spread risk through a well-balanced and diversified portfolio of assets.

Cashing out too soon

South Africans can retire from as early as 55, 60, or 65.  However, the biggest drawback to an early pension is that it will reduce the amount of money you receive each month.

At the age of 65, when others are enjoying a higher monthly pay-out, you may regret the decision to start taking payments early—especially if you did not save enough.

It is essential to talk to a financial planner to help you break down how much you’ll get each month if you take your pension now, versus waiting till you are 65.


Retirees are unfortunately amongst the most targeted for scams.  Fraudsters are always on the prowl, eagerly waiting and looking for ways to scam retirees of their pension pay out and contributions.

Always know who you are dealing with—sometimes people claiming to be phoning from the bank might not actually be from the bank.  For instance, FNB will never ask you to share your username, password, or OTP (one-time pin).

Tax misconceptions

Most forms of retirement income are taxable.  Many retirees are under the impression that their money does not get taxed when they retire, leading them to withdraw large sums of money frequently.

Speak with a financial planner or tax advisor about creating a tax-efficient distribution strategy for retirement.  This professional will look at your tax bracket, retirement accounts, tax free accounts, and pension funds to help you withdraw money in the most tax-efficient way.


The story of retirement has changed drastically, and the rules are vastly different from years back.

The path to retirement now includes a mixture of saving strategies consisting of steady pension contributions from your employer, retirement annuities, tax-free saving investments, and emergency savings.  For seniors nearing retirement, reach out to your bankers and financial planners.  We have an array of retirement planning solutions to help you save and grow your money.


Himal Parbhoo is the chief executive officer of FNB Cash Investments.