Frequently Asked Questions


Retirement is one of life’s most significant transitions, and with it can come some uncertainty. Of course, the better prepared and informed you feel, the less anxious you are likely to be; so, we hope these answers to the most frequently asked questions will help you look forward to retirement with confidence.

Will I have enough?

Fortunately, it is possible for us to calculate, with reasonable accuracy, until what age your money will last you. To do this, we need to know three things:

  1. What is the current size of your total retirement funding? This includes all savings and investments you have set aside to fund your retirement.
  2. What monthly income do you envisage yourself needing, and what lump sum withdrawals are you anticipating (for special events or vacations, for example?
  3. What rate of investment return or growth would you realistically like to see in your retirement funding over time?

Once you provide us with this information, we use a financial planning tool to calculate the age to which your money will last. We are then able to consider various scenarios to assist you in making the most of your money in RetiremeantTM.

EXAMPLE

Bronwyn is retiring at 65.

  1. She has R5 million in cash in the bank, and this is the total of her retirement savings.
  2. She wants an income of R20,000 per month, and an additional R50,000 per year to cover her Bucket WheelTM goals. These are after-tax amounts and must increase by the rate of inflation every year.
  3. She is happy to use a fairly conservative, average investment return that beats inflation by 2% per annum.

Based on this information, our financial planning tool estimates that Bronwyn’s retirement funding will most likely last until she is 91 years old. Remember, the greater the return on your investment, the longer your money lasts. So, were Bronwyn to target an average return that beat inflation by 4% per year (a less conservative target), we estimate that her money will last until she is aged 111.

It’s important to note, though, that every choice comes with its own consequence. The greater the return on investment you choose, the greater the investment risk to which you are exposed. Naturally, you will experience daily positive and negative fluctuations in the value of your retirement savings and investments. When deciding on a realistic rate of investment return, therefore, it is essential that you understand, and feel you can endure, the level of risk you choose.

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To find out what your graph looks like, click here to contact us.

Will my income in retirement keep up with inflation?

As RetiremeantTM Specialists, we encounter people daily who have differing financial circumstances: of course, there are those retired people whose savings will be enough, and then those who need to keep a close watch on their budgets. And there are those who are enjoying inflation-based increases in their income, but who are unaware that, at their rate of living and spending, they will far outlive their money!

It’s therefore important for you to plan both for inflationary increases and for the peace of mind that comes from knowing that your money will last the course of your retirement.

It is best for you to determine your particular financial needs during your retirement – based on your unique personal circumstances – but you may find this example of value:

Adam Carley has R3 million in the bank to fund his retirement. He would like an income of R15,000 per month, which will increase at the rate of inflation every year, and he would like to know how long his money is likely to last.

This graphic is a simple summary of the financial calculations we did for him. Notice how the return that is assumed shifts the age to which his money lasts. Each calculation includes inflationary increases every year.

Return Assumed Age to Which Money Lasts
Inflation84
Inflation + 2%88
Inflation + 4%94

When determining if your income will keep up with inflation, consider other factors that may have an effect on calculations done for you: the source of the money you invest, your personal tax situation, and any lump sums you would like to draw from your funds. Bear in mind that the return you may choose to target will fluctuate over time, so the age predicted in the second column is only a guide to help you choose a suitable investment return to target.

Find out if your investment will keep up with inflation: click here to contact us.

How and where should I invest my money for retirement?

The answer to this question is different for each of us. Deciding on where to invest your money depends on what it is you want that money to do for you. If you first create a picture of what you want to retire TO (your ideal life: how you want to live, what you still want to achieve, how you will enjoy yourself), you will have a clearer idea of what you want from your money. It’s then relatively easy to devise a suitable investment strategy … and this guides you in determining where and how your money should be invested – this is the difference between investing and speculating.

EXAMPLE

Let’s assume you want to invest your retirement money. It’s quite obvious that living more extravagantly (in contrast to conservative spending) means that you will require a greater return on your investments. So, to know how to invest your money you have to target a return that will ensure you have sufficient funds to support your desired lifestyle.

Having established the return you want from your investments to meet your lifestyle goal, the next decision is where to invest your money to secure that return – and this is through building an investment portfolio. We help by building a bespoke investment portfolio for each client to achieve their particular targets.

Each portfolio is comprised of various asset classes: cash, shares, bonds, and property (both locally and offshore); each of these has, over time, a different likely return and a different extent to which it will fluctuate. By a careful selection of each asset class in the right proportion, we target the return you need at the lowest level of risk (so as to minimise fluctuation or volatility). The final step in investing your money wisely is to understand and accept the risk you have to take to achieve the return you need to live the lifestyle you want. Understanding the risk and accepting it means you are less likely to have unpleasant surprises.

Find out what your targeted return should be, click here to contact us.

Where will my income come from?

There are various sources from which you might receive income during your retirement.

The following commentary deals with the source which Chartered Wealth Solutions manages on our clients’ behalf.

In most clients’ cases, we manage a flow of income to them:

  • Monthly, to fund their daily lifestyles, and
  • “lump sums” (for holidays and other Bucket Wheel items).

This flow of income invariably comes from two investments that we set up for our clients when they retire. These are:

  1. a pension, called a Living Annuity; and
  2. a Tailored Portfolio (similar to a unit trust, and this is tailor-made for each client).

The following table identifies some assets you might have before retirement. It also lists which retirement investment (Living Annuity or Tailored Portfolio) you may want to consider transferring some or all of your assets into on retirement, depending on your personal circumstances:

Living Annuities: Tailored Portfolios:
Retirement Annuities*Cash, fixed deposit or money market
Pension Funds*Consolidation of unit trusts and life insurance policies (including endowments)
Provident FundsSale of businesses or properties
Preservation Pension Funds*Sale of shares
Preservation Provident FundsAny other assets that you might sell on retirement

Note the investments marked with an asterisk in the left-hand column of the table. If you have one or more of those listed investments, it is likely that you will have both a Living Annuity and a Tailored Portfolio at retirement. Both have distinct advantages and disadvantages.

LIVING ANNUITY versus TAILORED PORTFOLIO

A Living Annuity attracts no tax on the interest or the capital gains earned; it is also exempt from estate duty. A Tailored Portfolio, by contrast, accrues taxable interest and capital gains for you and is estate dutiable. In light of these differences, the Living Annuity is most often the better choice of investment.

A Tailored Portfolio is completely flexible, allowing for any level of drawings (income) at any time (monthly or on an ad hoc basis) and these drawings are tax-free! A living annuity, however, provides an inflexible pension that can only be changed in size, by you, once a year. This income is taxable. That makes it a definite win for a Tailored Portfolio!

By carefully managing the drawings or income from these two investments, we can help you secure exactly the income and lump sums you need in the most tax (and estate) efficient way. Finally, we take into consideration any other sources of income (and lump sums) that you may receive during your retirement, for example, property rentals, income from work done beyond normal retirement age and/or dividends.

Find out more about how this applies to you – click here to contact us.

Why do I need a RetiremeantTM Specialist?

Retirement ranks as one of the most significant transitions you are likely to face in your life. Not only is it a financial challenge, but also an emotional one. To retire successfully, therefore, you need a holistic approach, a RetiremeantTM Plan, comprising both a Financial Plan and a Life Plan.

Let’s look at these Plans in more detail:

A Financial Plan requires the expertise of a specialist who understands the nuances of investments, tax planning and estate planning, so as to protect your life savings, and ensure they last the rest of your expected lifetime. Your Financial Plan will include advice on what your investment portfolio should look like to target your required investment return, what the tax implications are of the investment, and what the implications are on your death, and how this affects your loved ones.

A Life Plan aims to help you transition into a retirement that you are looking forward to. As RetiremeantTM Specialists who, for many years, have journeyed with clients through this change, we know that it can be a confusing time. A process of envisioning a Retiremeant™ in which our clients have the freedom to achieve their yet unfulfilled dreams on their terms and in their own time lays the foundation for a shift – from focusing on what they are retiring TO, rather than from. This new chapter can be a whole new adventure – with the right planning.

A RetiremeantTM Plan, then, is one in which the two plans come together: a Financial Plan and a Life Plan, since these are inextricably linked when we plan for a RetiremeantTM full of purpose.

So, it makes sense, when you are planning your retirement, to rely on a Retiremeant™ Specialist, who recognises the importance of your life goals in planning your money.

For a complimentary consultation click here to contact us.

How can I retire successfully?

You may have heard the sage warning: failing to plan is planning to fail. At Chartered Wealth Solutions, we believe that a successful transition into retirement starts with holistic planning. Yes, the money is very important, as it is the enabler for the life you are dreaming of for this second half; but what is that money for?

Together with your Life Planner, you can create a vivid vision of what you want the rest of your life to look like, because retirement is a journey, not a destination. A positive attitude, one that looks forward to realising all the dreams you still have inside you, lays the foundation for a significant RetiremeantTM. According to writer, George Eliot, “It’s never too late to be what you might have been,” and RetiremeantTM offers you a unique opportunity: the freedom to achieve your yet unfulfilled dreams on your terms and in your own time.

You may choose never to retire in the traditional sense of the word, but, whatever you want to do, you can still make a valuable contribution to your community and family – retire on purpose with purpose.

A holistic RetiremeantTM is a balanced retirement. Why not take our complimentary Balance Test and see how you are faring in creating some balance in your life right now: Click here.

Inspirational author Brene Brown says that “we don’t have to do all of it alone; we were never meant to.” Chartered Wealth Solutions has created a Retire Successfully community: find us by clicking here. On this website, you can read real-life stories shared by our clients who are making their own transitions – close to or in retirement. Their struggles, lessons and triumphs afford us all the opportunity to learn from their experiences.

What makes Chartered Wealth Solutions unique?

Years of planning clients’ finances has taught us a significant lesson: while money can make a retirement comfortable, it cannot create happiness and fulfilment.

Being prepared – both emotionally and financially – lays the foundation for a contented retirement. We therefore encourage our clients to see this transition as a life event, not only a series of economic decisions. And, while many people let retirement happen to them, we love to see our clients taking charge of their circumstances and engage in the planning process with us.

We encourage our clients to explore:

  • what kind of life would you would like to live during your retirement.
  • what changes you anticipate along the way.
  • how you will get the most out of each and every day?
  • what things you will miss most about your time at work and how do you plan to replace them during retirement.

These questions may be a useful guide to writing your own new script: what is the source of your self-fulfilment?

  • If everything turned out well, what would the feeling be?
  • If you were already ‘there’, who would you be?
  • What needs to be defined for you to achieve this balanced life you seek?
  • How will achieving this balanced life deepen your relationship with yourself and with your family?
  • What deeper purpose will creating this new life achieve?
  • What other goals will benefit from your achieving this?
  • What else needs to be in place for this to happen?
  • What do you need to say YES to, to create a life of meaning?
  • What do you need to say NO to, to create a life of meaning?
  • What skills do you have to shape this new future?

Our planning process is different from that of conventional financial planners because, for us, holistic retirement planning is the only way to create a successful plan of action – a plan that merges your money with how you create meaning in your life: Are you a life-long learner? Do you love helping others? Are your relationships a priority for you? Money is just one of the spokes on the Wheel of Balance, and we look at all of the areas in working with you to prepare for your life in RetiremeantTM. We have found that a balanced retirement is likely to be a happy retirement.

We start the process through a Life Planning meeting to help you envision that ideal life for this second half – then our Financial Planning meeting helps make that dream a reality. We have the expertise needed for planning your finances, with each of our RetiremeantTM Specialists being a Certified Financial Planner®.

Click here to take our Balance Test and assess how balanced your retirement currently is.

We invite you to make use of the free online resources we offer to help you retire successfully. It is our desire to help you live every day with purpose and meaning, believing that the best is yet to come!

To see us for a complimentary consultation click here.

Is Chartered Wealth Solutions the right company for me?

Chartered Wealth Solutions combines expertise with experience, and adopts a unique approach to RetiremeantTM Planning that recognises that your finances are inextricably linked with your life.

  • Chartered Wealth Solutions is the only financial planning business in South Africa specialising in helping people retire successfully.
  • All of Chartered Wealth Solutions Financial Planners is a Certified Financial Planner®.
  • Chartered Wealth Solutions has the latest tools available globally to plan for both your money and your life in retirement.
  • Chartered Wealth Solutions is an award-winning company, having won the Financial Planner of the Year Award in 2005 and 2008 and the Celestis Best Practice of the Year Award in 2009. (Click here to read more about our industry awards.)
  • Chartered Wealth Solutions has two internationally qualified Registered Life Planners in South Africa.
  • Chartered Wealth Solutions is a co-founder of the Financial Life Planning Institute of South AfricaTM.
  • Chartered Wealth Solutions is the most forward-thinking and pioneering company in its field, having created retiresuccessfully.co.za, a website devoted to helping its clients and the South African community – well – retire successfully!

Perhaps more significant than our awards, achievements and innovation is our commitment to our clients: we work hard to give our clients the security of knowing that we live out our values. Our passion is to inspire you to live a well-balanced and fulfilled life by promoting your personal and financial longevity through dynamic retirement planning. We believe our services will do more than surprise you. They will change your life!

To see us for a complimentary consultation click here.

Johannesburg Office
Tel: +27 11 502 2800
Eastern Cape Office
Tel: +27 41 001 1026
Western Cape Office
Tel: +27 21 001 0048
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