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Preparing for retirement is something
we all have to think about.

Fortunately, it isn’t as intimidating as you might think,
but the time flies!
5 years, 6 months, 3 months, 6 weeks and boom
– the day has arrived!


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5 years to go

Find out exactly how much you have put away for your retirement and what the shortfall will be.

If you belong to a company pension fund where the company matches your monthly contribution, increase your instalments to maximise the company contribution. Otherwise speak to a financial adviser and decide on a plan of action.

One option is to continue working. Check what your employment contract says. If it stipulates a retirement age, you won’t have a choice – but you’ll have three years to set up a post-retirement income.

If you are still paying for your children’s education or have an adult child living with you, now is the time for a family meeting. How much can they contribute? How much will you be able to contribute from now on? Set some boundaries.

6 months to go

Speak to your HR manager or financial adviser again and find out where you stand now. Envision how you are going to be spending your days. While you will save on workwear and transport, the first 10 years of retirement tend to be more active – and expensive – because that is when you are likely to travel, visit children and grandchildren, and explore new hobbies.

Even more important, and unavoidable, are medical expenses. If you’re on a hospital plan, now might be a good time to upgrade to a better, more comprehensive plan.

On top of that, it’s time to seriously consider where you will live once you need full-time care. An assisted-living facility? What is included in the monthly fee and what do you have to fund yourself? At the same time, update your will to reflect your new financial situation.

3 months to go

Time to decide: do you want to take a portion of the full benefit in a lump sum? Or do you want an annuity that pays out a monthly income? Speak to a financial adviser about the tax implications of the various options – capital gains tax and your annual SARS bill. Don’t forget to ask about commission, administration and other fees, and penalties for switching to another fund, too.

If you have more than one potential source of income, for example, a pension fund and retirement annuity, find out what the various pay-out dates are and stagger them, if necessary. Make sure of the cut-off date(s) for informing your fund(s) of your decision. If you miss the deadline, they will probably decide for you.

6 weeks or less to go

Make sure your retirement fund has your exit documents and your tax registration number. At the same time, check that you have the name of the plan, your membership number and the name and contact details of the fund manager, as you will have to deal with them directly from now on.

The big day

If you got tax clearance and your exit paperwork is in order and has been submitted on time, you should get your first pay-out at month-end.


This article originally appeared in Mindspace magazine in January 2021.

Old Mutual Life Assurance Company (SA) Limited
is a licensed FSP and Life Insurer.


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Relevant articles:

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Old Mutual – Budget speech 2021

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