According to the Future of Global Retirement Report by Smart (2023), the biggest fear for most retirees is running out of money during retirement. This fear is valid, as retirement could span 20 to 30 years—or even longer in some cases. Managing your savings over such an extended period requires careful planning, discipline, and the right strategies to ensure your financial security.
Here are seven essential strategies to make your money last throughout retirement.
1. Know Your Retirement Number
The first step in securing your retirement is understanding how much you’ll need to cover your expenses. Start by calculating:
Essential Costs: Housing, healthcare, utilities, and groceries.
Discretionary Spending: Travel, hobbies, and leisure activities.
Longevity Risk: Plan for 20–30 years or more, to avoid outliving your savings.
A common rule of thumb is to have 20–25 times your annual expenses saved. For example, if you’ll need R500,000 per year, aim for a retirement fund of at least R10–12.5 million.
At Family Wealth Custodians, we divide retirement into three distinct phases to better plan for your financial needs:
The Go-Go Years: Early retirement, when you’re most active, with expenses peaking due to travel, hobbies, and lifestyle activities.
The Slow-Go Years: Activity slows down, expenses stabilize, and healthcare starts becoming a more significant part of the budget.
The No-Go Years: Health becomes the primary focus, discretionary spending declines, but medical expenses often rise significantly.
Planning for these phases ensures your savings are allocated to meet your changing needs over time.
2. Break Free from Debt
Debt can be a significant burden in retirement, eating away at your savings and limiting your financial freedom. Evaluate your liabilities:
Mortgage: Aim to have your home paid off before retirement.
Credit Cards and Loans: High-interest debts should be eliminated as a priority.
For instance, I once advised a widowed retiree to cut up her credit card altogether. Unless you’re earning meaningful rewards or mileage (and even then, these are often not worth it), credit cards can become a financial trap in retirement. Living within your means and eliminating unnecessary debt gives you far greater flexibility and peace of mind.
3. Manage Healthcare Costs Proactively
Healthcare costs are one of the biggest risks to your retirement savings. The average price increase for South Africa’s largest medical aid schemes in 2025 is 10.7%, far exceeding inflation.
To prepare:
Comprehensive Medical Aid: Ensure your coverage is tailored to your needs and budget.
Healthcare Fund: Set aside a dedicated fund for out-of-pocket expenses and unforeseen medical emergencies.
Plan for Long-Term Care: Consider the costs of long-term care if applicable to your circumstances.
In my experience, healthcare inflation is one of the biggest derailers of retirement plans, so proactive planning is crucial to avoid financial strain.
4. Create a Sustainable Withdrawal Strategy
How much you withdraw from your savings each year determines how long your money will last. A common rule of thumb is the 4% rule:
Withdraw no more than 4% of your total retirement savings in your first year.
Adjust annually for inflation to maintain purchasing power.
However, every person’s situation is unique. At Family Wealth Custodians, we recommend sitting with a professional to determine your specific needs. We conduct a comprehensive cashflow analysis and evaluate multiple return scenarios to identify the sustainable monthly withdrawal amount that works for you. This personalized approach helps ensure your money lasts throughout retirement, no matter the circumstances.
5. Stay Invested and Diversify
Even in retirement, keeping your money working for you is essential. Inflation, especially medical inflation, can erode your purchasing power over time.
Consider this: If you start working at 25 and retire at 65, you’ve worked for 40 years—about 480 paychecks. But if you live until 95, which is increasingly common, you’ll need to pay yourself for 360 months during retirement.
To ensure your money lasts:
Balanced Portfolio: Maintain a mix of growth (equities) and income (bonds, cash) investments to sustain growth while managing risk.
Reassess Regularly: Adjust your portfolio to reflect your evolving goals and financial situation.
You can’t afford not to take some risk to generate long-term growth, but you also shouldn’t "put all your chips on red." Diversifying your portfolio is a balancing act that ensures stability while maximizing returns.
6. Diversify Your Income Streams
Relying on one source of income in retirement can be risky. Diversify to create a more secure financial base:
Passive Income: Rental properties, dividends, or interest from investments.
Annuities: Guaranteed income provides stability and peace of mind.
Part-Time Work: If feasible, consulting or freelance work can supplement your income while keeping you engaged.
A diversified income approach reduces reliance on any single source, providing greater financial resilience.
7. Avoid Emotional Overspending
It’s easy to overspend in the excitement of early retirement, but doing so can lead to financial strain later. To avoid this:
Stick to a Budget: Create a realistic spending plan that aligns with your goals.
Plan for Splurges: Allocate a portion of your savings for travel or hobbies to enjoy guilt-free.
Focus on Needs vs. Wants: Prioritize essential expenses over discretionary spending.
Final Thoughts
Running out of money in retirement doesn’t have to be your reality. With proper planning, disciplined spending, and the right strategies, you can ensure your financial security and enjoy every phase of retirement.
If you’re unsure about your readiness or need help crafting a sustainable financial plan, let’s chat. Together, we can design a strategy that helps you retire with confidence and peace of mind.
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