Retirement is a universally anticipated life stage, and it is often planned with the assumption that one will stop working at around age 65 and begin to draw down accumulated savings. Traditionally, retirement models forecast that retirees will require income for approximately 15 to 20 years, based on an assumed life expectancy of 85. However, these assumptions are increasingly outdated.

Advancements in healthcare, nutrition, and overall quality of life are significantly extending lifespans, particularly among middle- to high-income South Africans. Despite this, retirement planning strategies and financial products have yet to adequately adjust to these demographic and life-expectancy changes. The looming longevity crisis demands a re-evaluation of how long we should plan to live, and how to ensure sustainable income through those years.

The South African reality: Life expectancy is increasing

According to the 2023 mid-year population estimates from Statistics South Africa, the average life expectancy at birth is currently 62.8 years for males and 68.3 years for females. While these figures may seem modest, they fail to capture the life expectancy of individuals who have already reached the traditional retirement age of 65. For these individuals, life expectancy is significantly higher.

Actuarial projections and global data confirm this. According to the Society of Actuaries (2022), there is a 25% to 35% chance that at least one partner in a married couple (aged 65 today) will live past age 95. Discovery Life’s internal mortality data echoes this, revealing that many of their middle- to upper-income clients are living well into their 90s, a trend observed increasingly over the past decade (Discovery Life, 2024).

The rise in centenarians (people living beyond 100 years) is another striking indicator. While still a small portion of the population, their numbers have grown markedly in South Africa. These statistics reflect not only improved healthcare but also better socioeconomic conditions for certain demographic groups. Yet, retirement planning models have remained anchored to an 85-year life horizon, a benchmark that is no longer aligned with reality.

Why do we struggle to envision extreme longevity?

Despite clear data showing that more people are living into their 90s and beyond, many individuals find it difficult to picture themselves doing the same. This disconnect is rooted in both psychological and societal factors.

First, the concept of extreme longevity feels abstract and distant. Most people base their expectations on personal anecdotes – the ages their parents or grandparents reached – rather than actuarial data. If few in their immediate circle lived past 90, the notion of reaching 95 or 100 can seem implausible.

Second, our brains are wired with what psychologists call “temporal discounting” – the tendency to undervalue the importance of events that are far in the future. Planning for life at age 95 competes with more immediate financial pressures and goals, making it easy to deprioritise.

Culturally, there’s also a lack of visibility and representation of older adults thriving in their 90s. Media and advertising often portray old age as a time of decline rather than continued growth and purpose. As a result, many people associate very old age with poor health or dependency, leading to avoidance rather than proactive planning.

Lastly, the retirement and financial planning industries themselves have contributed to a mindset anchored around 85. By promoting retirement products with default planning horizons that stop at this age, they inadvertently reinforce a cap on longevity expectations, even as real-world data challenges that limit.

Together, these psychological and social biases make it hard for people to truly internalise the idea that they might live to 95 or beyond, and plan accordingly.

Why the age-85 retirement model is flawed

Planning to live only until 85 may have been defensible decades ago when far fewer individuals lived beyond that age. Today, such planning introduces considerable risk. Most retirement income strategies are built on decumulation models that assume a fixed endpoint. This is problematic for several reasons:

• Underfunding risk: If retirees live longer than planned, they may exhaust their resources in their 80s or early 90s, leaving them financially vulnerable in their most dependent years.
• Over-conservatism: Conversely, retirees may draw down too little in fear of running out of funds, leading to an unnecessarily frugal lifestyle despite adequate savings.
• Healthcare costs: The final decade of life often incurs the highest medical expenses, exacerbated by medical inflation that outpaces CPI by 3-5% annually (Council for Medical Schemes, 2023).

In short, outdated assumptions heighten the risk of late-life poverty, particularly for women, who generally live longer, earn less over their lifetimes, and face additional financial headwinds due to career interruptions.

The impact on South African retirement planning

South Africa’s retirement system remains ill-equipped to manage longevity risk. The Sanlam Benchmark Survey (2024) reveals an alarming reality: only 27.1% of standalone fund members and just 22.9% of umbrella fund members are expected to maintain their pre-retirement standard of living. These figures mark a slight improvement from prior years, but they remain deeply concerning, especially given rising life expectancy. An even more troubling finding is that 66% of umbrella funds now believe that the normal retirement age is no longer sufficient to accumulate enough savings to support an adequate standard of living through retirement. This reinforces the urgency of revising planning assumptions beyond the outdated benchmark of living only to age 85.

The system is characterised by low preservation rates – many South Africans cash out their pensions when changing jobs, annuitisation uptake is minimal, and a weak culture of long-term saving exists in South Africa. These issues are compounded by the fact that many South Africans enter retirement with high levels of debt and minimal discretionary savings.

Women are particularly at risk. Stats SA (2023) notes that women live on average five and a half years longer than men. They are also more likely to work in informal or part-time roles, take time off for caregiving, and have less access to employer-sponsored retirement schemes. These dynamics result in lower accumulated retirement savings.

After the loss of a spouse, many women find themselves navigating retirement alone, with insufficient income and limited financial advice. The gender disparity in retirement readiness underscores the need for more tailored and inclusive planning strategies.

Adding to the challenge is South Africa’s limited state support. The older person’s grant, currently set at R2,180 per month (National Treasury, 2025), provides a bare minimum and is insufficient to cover basic living expenses, let alone escalating healthcare needs in later years. The state does not have the fiscal capacity to act as a safety net for a growing population of retirees who outlive their savings.

In conclusion:

Longevity is no longer a niche concern for a select few – it is a mainstream risk that threatens the financial security of most retirees. South Africa’s social and economic infrastructure is not designed to support individuals living 30 years beyond retirement. As more South Africans enter their 90s without updated planning models and retirement products, we risk creating a generation of retirees who are financially dependent on their children or the state.

For financial advisers, the onus is clear: retirement plans must evolve to accommodate longer life expectancies. Clients must be guided not just toward retirement, but through it, with sustainable strategies that reflect modern realities. Retirement planning cannot end at age 85. It must stretch to 95 and beyond.

Sources:

• Council for Medical Schemes. 2023 Annual Report.
• Discovery Life. (2024). Client Longevity Insights. Discovery Group Risk Report.
• Investopedia: “Temporal Discounting: The Psychology Behind Future Reward Depreciation” by Adam Hayes, published 27 February 2025.
• National Treasury. (2025). Budget Review 2025.
• OECD. (2022). Pensions at a Glance 2022: OECD and G20 Indicators. Paris: OECD Publishing.
• Sanlam. (2024). Benchmark Survey Report: Retirement Intelligence.
• Society of Actuaries. (2022). Longevity Risk: Planning for Uncertain Lifespans.
• Statistics South Africa. (2023). Mid-Year Population Estimates.