Last-minute strategies to boost your retirement income

What should you do if retirement is looming and you haven’t saved enough? 

The first thing is not to panic and do something stupid with the little retirement savings you’ve got, says Magnus de Wet, director at Vista Wealth Management. 

Instead, face the problem head-on by taking stock of all your retirement savings, ensuring you understand the maturities and potential payouts for each investment, and then calculating the scope of your potential shortfall, he advises.

The second step is to get a plan to deal with it. “Financial planners are not only for the rich, and their services often come at low cost, or on a sliding scale benefitting smaller investors. 

A financial planner can help you create a plan to manage the shortfall. Note, however, that financial planners cannot perform miracles,” says De Wet

Barrie van Zyl, a senior manager at Alexander Forbes, says there is no “miracle cure” for a person who has five to 10 years to go to retirement before realising they haven’t saved enough.

“The last-minute strategy is lifestyle changes,” he says. “Try to reduce debt; budget carefully.”

Delaying retirement can also help, according to Wanita Isaacs, head of investor education at Allan Gray, who says their research shows that delaying withdrawing from your savings by five years could increase your retirement income by 38%.

“This is probably the highest impact thing to do if you need a late-in-the-game boost in income,” she says. “Keep in mind that you do not have to start withdrawing from your retirement fund at any set age.

“While lots of companies do have a retirement age, it’s important for people nearing retirement to think about other ways to earn money after they leave their formal employment, so that they can delay withdrawing or withdraw less, at least for the first few years,” she says. 

“The other important thing to do is to rethink your retirement lifestyle. Most people can find space to reduce their budget in retirement. An option, for example, could be selling your property for a smaller, more affordable one,” Isaacs says. 

“More and more people are also now earning a living post-retirement; this means that their retirement savings bolsters their income, or provides for their later years, rather than needing to fund their retirement as a whole.”

Van Zyl recommends considering downgrading your house or renting out rooms on Airbnb as an extra revenue stream, which can also provide an income after retirement. “If you have two cars, go down to one,” he says.

Investors looking to boost their retirement capital should also ensure that they are contributing the maximum allowed amount every year to their retirement annuity and their tax-free savings account, says Warren Ingram, executive director of Galileo Capital.

This is part of the cover story that originally appeared in the 16 November edition of finweek. Buy and download the magazine here.

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