The hard truths about retirement planning.

Retirement is a topic frequently shrugged off by younger people, and also not being prepared for retirement is the cause of many people’s problems later in life. The topic of retirement is one that needs to be taken much more serious. The reasons are clear once you take a look at some of the latest South African statistics.

How big of a problem is not planning for retirement?

In South Africa a poor culture of saving is prominent, a topic often raised by the Institute for Retirement Funds Africa (IRFA). According to IRFA, more than two-thirds of retirement fund members have less than R50 000 in their retirement funds.

The 10x South African Reality Report of 2020 states that a shocking 49% of South Africans do not have a retirement plan. A further 75% are unsure and worried about how they will live after retirement.

That paints a dreary picture of the financial part of retirement in South Africa. Financial planning is the cornerstone of planning for your retirement. That is why we are going to take an extensive look at finances later in this blog series. This may lead you to ask: What else is there to plan?

The Definition of Holistic Retirement Planning.

Retirement planning refers to determining retirement income goals, however, in this article we follow a holistic approach and look at additional aspects of retirement planning that are not necessarily financially related.

Why Plan for retirement?

Spending your life living in the moment is great until you realize that you can no longer maintain your income. This happens for various reasons, some you may never see coming. Some unforeseen circumstances originate from medical issues, disability, or the onset of chronic disease. 

You may think that you are young, and still have lots of time to plan, but what happens if you are involved in an accident that renders you unable to work? 

Because you do not know what the future holds and retirement is a big part of life, it becomes crucial to start planning for your retirement as early as possible. The ever-growing cost of living and inflation makes saving enough an elusive goal to reach. 

You may feel that time is on your side, but it’s not really. The one constant of this whole dilemma is that the earlier you start the bigger impact your efforts will result in, and only then your retirement years can truly be golden.

What to consider when planning for retirement.

We now know that finances are a key part, the next runner up will be accommodation. The really tough question is, what are all the things you should consider for a fulfilled retirement? 

  • Types of retirement,
  • Housing requirements,
  • Health requirements,
  • Time management

What Is Abraham Maslow’s Hierarchy Of Needs? 

One of the best-known theories of motivation is created by Abraham Maslow and was published in his paper “A Theory of human motivation” published in 1943. Maslow’s hierarchy of needs suggests that humans must first fulfil basic needs before moving on to the next level of needs with self-actualization as the top tier. He believed that humans have an inherent desire to be self-actualized.

Maslows Hierarcy & Retirement Planning

As it is shown to the left of the diagram the hierarchy consists of three main sections:

  • Basic needs,
  • Psychological needs and
  • Self Fulfilment needs.

According to Maslow, the completion of one stage leads to the next. One can easily tie the three different stages to your age as you are going through life. The basic needs are the first step after school and Self-fulfilment is reached when you retire.

You really start planning or working on your retirement right after school or as soon as you become independent. The key takeaway here is that the second level depends on the first to be in place and so on. You cannot reach self-actualization without having any of the lower levels in place.

How does this apply to retirement planning? 

Maslow’s hierarchy provides a solid path or guide to plan for retirement with a goal to achieve. That means you can work on each different stage throughout your life to make sure you achieve your final goal, which is self-actualization or a fulfilling retirement.

The best outcome for your retirement plan will be to smoothly make the transition from your working life to being retired without losing any of your lower levels. 

Three Types Of Retirement.

Retirement comes in many forms, but ultimately groups into three categories. These are, 

  • Traditional retirement,
  • Semi-retirement and
  • Temporary retirement.

People in different careers tend to have different retirement goals. Let’s take an example, you envision retirement different if you spend your life doing hard physical labour as compared to a professional that does much less physical labour and more mentally demanding work.

Whereas with physical labour, your body becomes a limiting factor and you reach a point where you can no longer perform the physical tasks required to perform your job. Because physical labour is highly taxing on your body, you want to definitely stop the labour part and spend your time entirely on leisure. In this case, you will most likely go for traditional retirement.

On the contrary, if you spent your life as a CEO for an international company and many of your working days you travelled the world to attend meetings and do business, you most definitely do not want to spend your retirement travelling and touring the world. In this case, semi-retirement becomes a popular choice.

The third type of retirement is often found with people engaging in professional sports as a career. In most types of sports, you cannot keep performing at your peek into old age, and often sports icons retire from their career at a relatively young age. Sometimes they travel for a year, take a break and then pursue a new career. This is known as a temporary retirement.

Different retirement planning strategies require different planning.

So, it is clear that different lifestyles require different types of retirement plans to reach your goal of self-actualization. 

  • With traditional retirement, you save up a nest egg that should be big enough to carry you with no income throughout the remainder of your life. This is done with Retirement annuity funds where the company that you work for contributes to your retirement fund. The goal is to reach a grand total savings amount that will last.
  • In a semi-retirement strategy, you save up a smaller nest egg and then substitute your savings with an additional income stream that is less demanding and provides the time to dedicate to leisure activities, family and friends. Generating additional income is required but not overly important and most definitely not the focus of your energy.
  • In the case of temporary retirement, you accumulate a large nest egg/savings in a relatively short amount of time. Where you then take a break from earning an income and spend a part of your savings and time on leisure, friends and family for a time before diving back into a different career and starting the process again. Often people following this strategy repeat the process a couple of times in their life before settling for a traditional or semi-retirement.

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Retirement Planning & Accommodation

Where Will You Be Living?

The second tier of Maslow’s hierarchy relates to safety. This includes financial, health and the maybe most important one, accommodation. Where you live, your house changes with your demands throughout your life. It is definitely the biggest expense that will require the most from your efforts to not only obtain but also maintain and later in life scale down.

Buying versus Renting.

It does not matter what career you follow, you will need a place to stay. So, do you buy a house or do you rent? This decision greatly impacts your planning for retirement. When you decide to buy a house, apart from the pitfalls you may encounter, you will be investing more than when you are renting. This means that when you never buy a house and you only rent, you can save more as you have the opportunity to reduce your monthly expenses.

The upside of buying is that you are investing, and growing an asset that has the potential to eventually return big on your investment and contribute to your retirement fund. The downside of buying is that you are tying yourself down with a long term commitment and what happens if you for some reason no longer can fulfil your commitment? Buying a house is a big commitment. Here are some things to consider when buying a house.

As stated earlier the upside of renting is that you can spend less and have the opportunity to save more, depending on your accommodation requirements. The downside is that most people don’t save and completely get caught out at some point or the other. Whether you meet unforeseen circumstances or simply live in the moment with total disregard for retirement. But if you stick to saving and do not lose sight of your goals, you can benefit greatly from renting.

The crux of the matter.

Whether you buy or rent, at some point in your life you will reach a stage where the kids have left the house, you no longer need a big house with many rooms or your partner passes on and you are alone. Sometimes forced medical conditions changes your housing requirements. 

Inevitably you will reach a point where you must make changes to your housing situation. This is a massive change in your hierarchy of needs and you need to be prepared to make this change without upsetting your final goal of self-actualization. 

With that said, it should be clear that the only way to achieve this is with meticulous planning over a long time. The earlier in life you start, the more prepared you will be.

What are your options?

The reward for total unpreparedness is homelessness, I am sure no one will choose that if given the choice. The next level is moving in with your children. However, in some cultures, this is planned and the way it works. But keep in mind, at that point in your life you may have reached levels of high self-esteem, and success in your career and you are accustomed to being independent and self-sufficient.

Giving up all of that only to return to an environment where you become reliant on your children can be devastating and even have negative effects on your health. This clearly requires a different solution. 

Without a doubt, you need to include moving to one of the following environments into your retirement plan. Carefully created and managed environments for retirement come in these different configurations:

  • Retirement Villages,
  • Retirement Communities,
  • Retirement Homes and 
  • Old Age Homes or Frail Care Facilities.

That is exactly where La Gratitude comes into play. We specialize in homes for the aged, for people 50 years old all the way through to the elderly that require frail care services. Learn more about our accommodation services on our website.

What is the ideal scenario?

In an ideal scenario, your retirement planning will include the change from a big house filled with kids, to the point where you start scaling down and move to one of the places mentioned above. 

The truth is you may move more than once as you age and your health declines. With the decline in health comes an increase in dependence on medical assistance and facilities. 

Places like La Gratitude provide you with a settled community of your peers and allow for accommodation requirement changes with the least upset caused. This starts with totally independent living in your own flat or townhouse, Which from there moves on to an environment that offers assisted living conditions, tailored to your requirements all the way up to frail care, where you receive constant assistance. This option should be a part of your retirement planning.

Retirement Planning & Health

Retirement Planning For Health Requirements.

However no one plans to get sick, it does happen and can happen to you at any time. Therefore it is better to have a health plan in place as soon as possible and not only for when you retire. With regards to health and retirement planning, you ultimately have two options, get a medical scheme, often incorporated by employers as part of employee remuneration, or rely on government-provided services.

In the case of you opting in for a medical scheme, you will get assistance to the fullest on every part you need to know, costing through to benefits included and so on. But what happens if you do not have a medical scheme in place?

The South African Department of Health implemented the National Health Insurance as a financial system to pool funds to provide access to quality affordable health care services to all South Africans regardless of their socio-economic status. On 30 June 2017, the National Health Insurance policy document was gazetted after approval by Cabinet.

All the documents regarding the National Health Insurance are available for download from the NHI Website.

Different types of health requirements.

At La Gratitude our approach to resident care is one of encouragement to continue growth and blossom as people. Therefore we have diversified our medical care to better provide for each individual person. Ranging from minimal assistance to complete frail care. The groupings available are as follows:

  • Independent Living
  • Assisted Living
  • Long Term Care
  • Homecare

Feel free to visit our Medical Care Page to find out more.

Retirement Planning & Time Management

Retirement Planning & Time – your newly found freedom.

Often overlooked but still, an important part of retirement planning your retirement is time management. How will you spend your newly found free time? Did you know how you spend your time is closely tied to your mental health and falls into the psychological needs part of Maslow’s Hierarchy of Needs?

In the diagram above your psychological needs are separated into two sections, Love or Belonging and Esteem.

Love or Belonging and Esteem

This section is made up of Friendship, Intimacy, Family, Connections, Respect, Status, Strength, Self-esteem and recognition. During retirement, these are the crucial parts that increasingly become more difficult to maintain. 

Reasons, why it becomes more difficult to maintain these factors, are:

  • Your life partner or friend may pass away, 
  • Children get caught up in their own lives,
  • You are no longer in your work environment where you gained respect and grew your self-esteem,
  • Or inactivity and the lack of exercise that leads to a decline in your strength.

All of these factors play a vital role in maintaining your mental health. Once you let these slip depression, anxiety and other mental issues are bound to follow.

The takeaway here is that you need to plan your time and direct more time to service the important parts mentioned above to make sure you stay mentally healthy. Of course, the type of retirement you follow will greatly impact your time management plan. 

It is very important to stay active, we have some articles regarding activities and will in part three of this series take a deep look at everything regarding activities.

In conclusion to this retirement planning article.

You are never too young to start retirement planning, it takes a lifetime to be prepared. Follow a holistic approach to planning your retirement, do not think getting a Retirement Annuity and Medical aid is good enough. Take the head start and plan thoroughly all the aspects that will influence your retirement. Include as much as possible in your retirement planning, whether it is to go on traditional retirement, or semi-retirement, where you will be staying, who will be your friends, and what will you and your friends be doing, all important parts of a successful retirement plan.

You can make a difference


With your assistance, the volunteers at La Gratitude will be able to take better care of not only the residents at the old age home but also the greater Newcastle community. La Gratitude is constantly involved in outreach projects to help the elderly in need in and around Newcastle.

Your donations will be greatly beneficial in the provision of food and other basic necessities for the less fortunate elderly people that require assistance.

Donating is easy, click here to donate now.

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