Most Retirement Mistakes Aren’t About Saving Too Little

Retirement planning has always been demanding, but the conditions today — longer lives, leaner real returns, and shifting regulation — leave less room for error than they once did. Here are the ten mistakes we see most often, starting with a summary you can scan, then each one in detail with what to do instead.

1. Underestimating How Long You’ll Live

Most people still anchor their planning to living to 80 or 85. But medical advances, healthier lifestyles and family history mean a healthy 65-year-old today could easily see their 90s, or beyond 100. A retirement that begins at 65 and runs to 100 lasts 35 years — potentially longer than the working life that funded it.

The financial consequence is larger than it feels. Extending a plan from age 95 to 105 means funding ten extra years of income, which translates into roughly 20–30% more capital at retirement, depending on the real return your portfolio earns. And here’s the sting: that figure climbs toward a third precisely when your money is barely outpacing inflation — so underestimating longevity and overestimating returns compound into the same shortfall. Plan with conservative longevity assumptions, and model the capital a multi-decade retirement genuinely requires rather than guessing.

2. Assuming CPI+5% Is a Given

The 10% return myth is stubborn. In practice, many Regulation 28-compliant balanced funds have struggled to deliver even CPI+3% over the past decade. [VERIFY/REFRESH: as at 17 July 2025 the 10-year median balanced-fund return sat at about 7.46% p.a. and the 5-year median at 10.78% p.a., per Morningstar — replace with current figures before publishing.] The five-year picture has been more encouraging, but once advice and administration costs come off, many investors still fall short of the real return their plan assumes.

The fix isn’t pessimism, it’s realism. Plan around CPI+3–4% rather than a hopeful CPI+5%, and treat anything above that as upside, not a base case. Offshore diversification and a broader asset mix can lift outcomes, and reviewing the plan regularly keeps it aligned with an evolving market. Our note on retirement annuities and balanced-fund performance goes deeper on fund selection.

3. Ignoring the True Cost of Fees

An all-in fee of 1% sounds reasonable, but it’s increasingly the exception rather than the rule. Most investors face a higher Effective Annual Cost (EAC), which adds administration and advice fees on top of the Total Investment Cost already reflected in published returns. The gap between the headline number and what actually lands in your pocket can be wide.

The number worth tracking is your personal IRR — your internal rate of return, net of every fee. That single figure tells you whether your strategy is on track to meet your required return; if it consistently lags, the costs or the structure need attention. It’s also why we charge a flat advice fee rather than a percentage of your assets: the cost of advice shouldn’t quietly scale up just because your portfolio does.

4. Overconcentration in South African Assets

South Africans tend to over-invest at home, partly through familiarity and partly through Regulation 28 in retirement funds. But the JSE is under 1% of global equity markets, and the rand is structurally weak over the long run. Reg 28 now permits up to 45% offshore, and discretionary money has no such limit at all.

Global exposure is one of the most reliable long-term hedges available, particularly if your plans include travel, children abroad, or keeping emigration options open. Our offshore investing guide covers the vehicles — feeder funds, offshore platforms, and foreign-currency endowments — and the trade-offs of each.

5. Taking Too Little Risk, Too Early

It’s natural to want to dial down risk as retirement approaches, but many investors go too conservative, too soon. Growth assets — equities especially — remain the only asset class likely to consistently outpace inflation over a 30-year horizon, and a retiree still needs that engine running.

The real danger isn’t volatility itself; it’s sequence-of-returns risk — a run of poor returns in the first years of drawdown, while you’re also withdrawing income. The answer is structure, not retreat: cash buffers, careful drawdown management, and a portfolio built to absorb early shocks without abandoning growth. Our investment guidance for retirees works through sequence risk in detail.

6. Not Knowing Your Numbers

Planning for retirement without knowing your numbers is like building a house without a blueprint. You need a clear view of your required income, your sustainable drawdown rate, your tax position, your inflation assumption, and your longevity projection — and how they interact.

The interaction is what catches people out. A plan that needs CPI+5% to work, but earns CPI+2–3%, can see capital deplete alarmingly early — running dry in the mid-70s on numbers that looked fine on day one. The same plan, achieving its required real return, can comfortably last into deep old age. Small differences in assumptions have outsized consequences, which is exactly why modelling matters more than rules of thumb. Our worked example on whether R5 million is enough to retire shows how quickly the maths shifts.

7. Cashing Out When Changing Jobs

Too many South Africans still take a lump sum from a retirement fund when they change employers, even with preservation options available. The two-pot system has made preservation more structured by locking the retirement component, but leakage from the savings component still happens, especially among younger savers.

The cost is rarely visible at the time. Taking a payout in your 30s doesn’t just cost you that amount; it costs decades of compounding on it. Preserve wherever you can, and treat early access as a genuine last resort rather than a convenience. Our explainer on the two-pot retirement system sets out exactly what a savings-component withdrawal costs.

8. Underestimating Compound Growth

Time is the most powerful ally a retirement saver has, and the gap between starting early and starting late is staggering. As an illustration, R5,000 a month invested for 20 years grows to roughly R3.8 million; stretch the same contribution over 40 years and it grows to around R31.6 million (assuming 10% p.a. nominal, illustrative only). The difference isn’t double, it’s eightfold — almost all of it earned in the final stretch.

The lesson is simple to state and hard to practise: start early, stay consistent, and escalate your contributions with inflation or salary growth so compounding has the most possible time and capital to work on.

9. Trying to Do It All Yourself

With so much information freely available, going it alone is tempting. But retirement is one area where the stakes are too high for guesswork, and where mistakes often stay invisible until they’re expensive to undo. The value of independent advice isn’t stock tips; it’s objectivity, a second set of eyes on the blind spots, and a withdrawal strategy aligned to your tax position, lifestyle and risk capacity.

The word that matters is independent — advice free of product incentives and commission. For the full framework, our retirement planning guide brings the whole picture together.

10. An Outdated View of Retirement

Retirement isn’t the hard stop it used to be. For many it’s a transition — part-time work, consulting, a second career, phased withdrawal — rather than a single date when income ceases and leisure begins. A rigid plan that assumes zero income from 65 onward is increasingly out of step with how people actually live.

Build flexibility in. Allow for multiple income sources, for lifestyle needs that change through the decades, and for health and care costs that tend to arrive later. A plan that can flex is far more durable than one built around a single, fixed picture of what retirement is supposed to look like.

The Pattern Behind the Mistakes

The retirement industry is fond of a particular statistic: that only around 6% of South Africans retire comfortably. It gets quoted often, usually to suggest that savers are the problem — we don’t save enough, we don’t preserve, we lack discipline. There’s truth in that. But it’s striking how rarely the people quoting the figure turn the lens on themselves: on the fees that quietly consume a quarter of a fund over a working life, on the home-bias and product bias built into so much “advice”, and on the outdated assumptions the industry keeps selling.

Look back over the ten mistakes and a pattern emerges. Almost none of them is a failure of effort. They’re failures of assumption — about longevity, returns, costs, and what retirement even is. That’s the encouraging part: assumptions can be tested and corrected, which is most of what good planning actually does.