Retirement

Building a retirement that lasts: Spend smartly and invest wisely

Retirement is about more than just stopping work. It is about ensuring that your savings can support your lifestyle for the rest of your life. Two realities make this challenging: people are living longer, and the cost of living rises over time. Making the right decisions around withdrawals, investment mix and risk management is critical to achieving long-term income sustainability.

The problem

What does a sustainable retirement mean?

Withdraw income at a level your investment portfolio can support over the long term.
Maintain exposure to growth assets to protect purchasing power against inflation.
Manage the key risks that can erode retirement savings.

Key risks retirees face

Inflation risk

Your income does not keep up with rising living costs.

Longevity risk

The risk of outliving your retirement capital.

Sequence risk

Sequence risk occurs when markets fall early in your retirement while you are drawing an income, so you sell units at low prices – your savings may never fully recover.

Investment risk

Excessive volatility or overly conservative portfolios.

Dependant risk

Not leaving sufficient income or capital for loved ones.

Your solution

Choosing the right retirement solution

Living annuities offer flexibility, investment choice and potential capital legacy, but the risk of income sustainability lies with the investor.
Life annuities provide guaranteed income for life, transferring longevity risk to the insurer, but with limited flexibility and no capital legacy.
In many cases, a blended approach can deliver the best outcome.

Lever 1: Asset allocation matters

Our research shows that portfolios with higher exposure to growth assets such as equities have historically delivered stronger returns above inflation. Similarly, clients with larger asset bases (portfolios) are typically better positioned to take on investment risk and benefit from long-term growth.

Even small differences in annual returns, when compounded over the long term, can significantly impact income sustainability.

Lever 2: Withdrawal discipline

Higher withdrawal rates place significant strain on retirement savings, especially during periods of market volatility. Lower-asset portfolios often cause you to withdraw too much too early, increasing the risk of running out of capital. A sustainable income depends more on withdrawal discipline than on short-term market performance. A blended approach can help cover essential expenses with a guaranteed income component, while using a living annuity for discretionary spending and growth, and as a potential legacy. As the living annuity grows, withdrawals from that portion can be increased within sensible limits. Glacier’s average withdrawal rate across clients is 8,93%, compared with the Association for Savings and Investment South Africa (ASISA) industry average of 5,6% in 2024. A withdrawal rate of 8,93% represents significant sustainability risk, with clients having too few assets for the level of income they are drawing.

Our key message

A simple checklist

A sustainable retirement requires the right balance between income needs, investment growth and risk management.
Withdraw prudently, stay invested for growth, and review your strategy regularly with your financial adviser.
Build guardrails for market downturns (for example, keep a cash buffer and avoid increasing withdrawals after a bad year).
The goal is simple: ensuring your income lasts as long as you do.
The key message is that withdrawal rates have a bigger influence on your portfolio than asset allocation, as asset allocation is the main driver of returns, while withdrawals deplete your capital.