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The Impossible Task of Pensions

Relying on your pension fund in retirement will more than likely not be enough.

Andrew Padoa




Majority of people have chronically under-saved for retirement. This may be a result of not saving enough, starting to save too late, or using pension money to purchase cars or furniture instead of preserving the capital when resigning from employers. We need to save more for retirement or be prepared to work into our 70s.

Continuing your lifestyle

Let us take a look at an example to explain why pensions will not be enough to support our lifestyles in retirement.

Greg is 25 years old, earning R 8 000 a month and saves 15% of his income until he retires at age 65. Let us assume his investment grows at 10% per annum and his salary increases at inflation (assumed to be 6% over the long term).

Should Greg wish to receive a monthly after tax income of R 8 000 per month in today’s terms at retirement, his capital is likely to last until age 81. This does not seem too bad, but the major concern with this is that R 8 000 per month will probably not be sufficient for Greg as he would like to have a higher standard of living in retirement. If Greg wanted R 12 000 per month in retirement in today’s terms, his capital is only likely to last until age 73.

Focused on different channels

The above scenario is unfortunately something that will become more and more common in the future. People are living a lot longer and have saved nowhere near what they should have in order to support their lifestyle in retirement.

The above scenario also points out that you cannot solely rely on your pension fund for retirement income. We need to save more in our personal capacity to ensure that our money can support our lifestyle for a significant period of time.

To assist your capital to last longer, you could do the following:

  • Work beyond the ‘normal’ retirement date of age 65, perhaps working until age 70. This will not only allow your investments an extra 5 years of compound growth, but it will also reduce the amount of years in retirement you will need to draw from your investments.
  • Start saving MORE for retirement. Thereby having a larger investment portfolio to live off in retirement.
  • Cut out unnecessary expenses in retirement where possible Reduce your income needs in retirement as much as possible. The less income withdrawn from your investments, the longer your portfolio is likely to last.
  • Allocate more of your investments to growth assets (shares and property) during your accumulation phase, in order to achieve returns in excess of inflation. Ensure that you understand the risk or volatility that comes with this.

Andrew Padoa CFP ®

BCom Financial Management (UNISA)

Post Grad Diploma Financial Planning Law (UFS)

*** Consolidated is a national financial planning practice with offices inWestern Cape,Johannesburg,Tshwane,Eastern CapeandKwaZulu-Natal.  Andrew is based in KwaZulu Natal.

For more information please visit:

Andrew Padoa works in the Private Client’s division at Consolidated Financial Planning. His area of expertise is investments, estate planning, retirement planning and portfolio benchmarking. He has had numerous articles published in the media on a number of topics related to personal financial management. Andrew is passionate about educating people and has given several financial literacy talks to both schools and corporates. His objective is to use his abilities and knowledge to help others achieve their financial goals. Visit for more information

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1 Comment

1 Comment

  1. Clive

    Mar 15, 2013 at 09:57

    Hi Andrew, while I agree with the general premise of the article (i.e. that pension funds face an impossible task and people need to save more) your logic has an error in it. The higher standard of living in retirement that you use to justify Greg wanting R12k at retirement is only really realistic if Greg received higher than inflation salary increases (i.e. these higher living standard expectations normally coincide with those who have been receiving those same living standards during their working career – it’s not as though the average person suddenly gets to retirement and then decides he/she wants the finer things in life). In the case of the 12k retirement, the salary increases should be above inflation.

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Personal Finance

6 Ways To Develop A Millionaire Mindset

Chasing money has remarkably little to do with getting rich.



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If you truly want to have a million dollars, you must first be and think like a millionaire. By doing so, you will attract the necessary resources to you.

So, you want to become a millionaire entrepreneur? You’re not alone. Many dream of leaving their job and becoming their own boss, enjoying the various millionaire lifestyles we watch on TV. But there’s a difference between those who dream of becoming millionaires and those who do. And it begins and ends with mindset. If you don’t develop that mindset, you will continue to spin your wheels, working just as hard, but never going anywhere.

Developing a millionaire mindset requires you to stretch your thinking. Start by developing the following six attributes.

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Personal Finance

4 Ways To Become A Millionaire Even When You Start With Little

It costs nothing to take advantage of the limitless opportunities online.

Timothy Sykes




The hardest part of becoming successful is getting started to begin with. But despite the challenges ahead of you, there’s a way to become a millionaire when starting with little. I’m going to show you four reasons why you can become a millionaire with just a small investment.

1. First focus on learning, not big gain

Education is your greatest weapon. Focus on learning in the beginning. Don’t make the mistake of focusing on making huge gains in the beginning. Learn everything you can because this is how you build the foundations for long-term gains.

Related: 21 Choices Millionaires Make That You Aren’t Making But Should Be

They say that if a millionaire goes bankrupt they’ll nearly always be able to get it back. And that’s because they might have lost their money, but they have the knowledge of how to get back to where they need to be.

2. You can learn loads about any topic online


I’m grateful for the internet. It’s the single biggest library in the world. You’re reading this article right now and you’re acquiring knowledge you wouldn’t have been able to acquire 40 years ago.

Use the internet to its fullest extent, whether that’s through reading books, browsing articles or watching video tutorials. Set some time aside every day to learn something online. It could be a video series or a favorite blog.

When you get into the habit of learning regularly you’ll find that you advance much faster.

3. Focus on the niche you love

These days you can learn about anything and target the niche you’re passionate about.

This is what I was able to do with penny stocks. I found a gap in the market and provided knowledge to people who wouldn’t have otherwise being able to access this sort of information.

You can do that with absolutely any niche. When you find a niche you’re passionate about and you use the reach of the Internet you start to make huge gains.

4. Prove your expertise by creating free content

Your reputation as an authority is the new business card. There’s a reason I created a penny stock guide and made it free for all. You may have already seen ads for it on social media. The way to succeed with little is to create a reputation through your content.

Related: How To Become A Millionaire, Explained In 1 Minute

It’s the gateway to success because through free content you start to build relationships with others who value your work. And from there everyone gets richer.

You can do lots with a little

The days when you needed a huge investment to become successful are long gone. These days you can do so much with just a little. Find what you love, advance your knowledge in that area, and create a product that fulfills a need. Finally, work on building up relationships through portraying yourself as an authority on your subject.

Combine everything together and you can accomplish anything.

This article was originally posted here on

Related: 13 Habits Of Self-Made Millionaires You Could Adopt Today

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Personal Finance

10 Tips To Become A Millionaire This Year

Becoming a millionaire requires changing your mindset and implementing some changes.

Murray Newlands



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Becoming a millionaire may seem out of your reach, but it’s possible with the right attitude and guidance. The fact of the matter is your income can only grow as quickly as you do, so you need to change your mindset to achieve your goal of becoming a millionaire.

Once you have a millionaire mind, you can’t lose it, no matter what financial or business mistakes you make along the way. To get yourself there, you’re going to need some structure. To help you, I’ve outlined the top ten tips you should follow to become a millionaire this year.

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