It is common knowledge that most South Africans cannot afford to retire at the normal retirement age. In the end you must work with what you got, and the role of the financial planner has become increasingly important. I say this because it leads to out of the box thinking in terms of different ways to structure funds and carry out scenario planning for funds to last longer. The risk involved in scenario planning is that you’re betting on an outcome with a certain degree of probability. There are a lot of ways to manage this risk but a change in variables might affect the outcome in a big way.

We often forget that taking on too little risk is sometimes the biggest risk in a portfolio (retired or not). I am not sure what income you require each month but let’s work on the maximum drawdown for a period of 24 years.

Scenario 1

This scenario shows how much you will be able to draw if you leave all your capital in the Nedbank Seniors Bond. I assume this return is given after fees and taxes.

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