Latest / Drive with John Perlman / In conversation with Discovery Invest

Transcript

In conversation with Discovery Invest · Drive with John Perlman

• 0:01
  Speaker 1: You're with John Perlman on 702. Let's walk the talk.
• 0:06
  Speaker 2: Seven minutes to five. People are living longer. Have you
• 0:09
  Speaker 2: planned for retirement or for a long retirement? Personal Finance
• 0:13
  Speaker 2: on 702 Drive with me, John Perlman, is brought to
• 0:16
  Speaker 2: you by Discovery Invest. Retire strong. Building retirement savings is
• 0:22
  Speaker 2: only half the job. Once you retire, the challenge shifts
• 0:25
  Speaker 2: to turning that lump sum into into lasting income without
• 0:29
  Speaker 2: drawing too much too soon or letting inflation erode its value.
• 0:33
  Speaker 2: Discovery Invest Retire Strong campaign highlights the importance of choosing
• 0:38
  Speaker 2: a sustainable withdrawal rate, keeping retirement money invested for growth
• 0:42
  Speaker 2: and reviewing the plan regularly. Esty Sievenster is Head of
• 0:47
  Speaker 2: Technical Marketing at Discovery Invest and joins us now to
• 0:50
  Speaker 2: explain how retirees can make their savings work for them
• 0:54
  Speaker 2: throughout retirement, however long that might be. Esty, welcome back.
• 0:58
  Speaker 2: Good to have you with us again. I would have
• 1:00
  Speaker 2: thought those initial stages of working out, okay, how much
• 1:04
  Speaker 2: money do I actually take out? That's quite tricky stuff
• 1:07
  Speaker 2: because Presumably, you don't want to be overcautious, but secondly,
• 1:11
  Speaker 2: you do want to be realistic. Is there a sweet spot?
• 1:15
  Speaker 1: Hi, John. It's great to be here again.
• 1:17
  Speaker 3: Yeah, so that initial stage is really important. It is
• 1:22
  Speaker 3: important how much you accumulate, how you're investing for your
• 1:26
  Speaker 3: retirement lump sum. But I think a lot of people
• 1:29
  Speaker 3: think that is sort of the be all and end
• 1:31
  Speaker 3: all and that's the finish line.
• 1:32
  Speaker 2: Right.
• 1:33
  Speaker 1: But it's not.
• 1:34
  Speaker 3: It's sort of the end of one journey, but the
• 1:36
  Speaker 3: beginning of another very important journey. And that is converting
• 1:40
  Speaker 3: that lump sum into income for the rest of your retirement.
• 1:44
  Speaker 3: And then again, it's very important how you invest, how
• 1:47
  Speaker 3: much you withdraw. Very important decisions that you then again
• 1:51
  Speaker 3: have to make with your financial advisor.
• 1:53
  Speaker 2: Some of the key questions because presumably you get the
• 1:57
  Speaker 2: best answer if you ask the right question.
• 2:00
  Speaker 3: So I think what you should ask your financial advisor
• 2:03
  Speaker 3: is not just is the pot of money that I
• 2:05
  Speaker 3: have enough but is it enough to sustain my standard
• 2:10
  Speaker 3: of living for the next 20 to 30 even 35
• 2:15
  Speaker 3: years and what do I need to do? How do
• 2:17
  Speaker 3: I need to invest? How much risk should I be
• 2:20
  Speaker 3: taking in my investment to make sure that it grows enough?
• 2:23
  Speaker 3: Because the retirement terms are so long, that sum of
• 2:27
  Speaker 3: money still needs significant growth. And then also, how much
• 2:31
  Speaker 3: can I afford to withdraw now? That's a very important question.
• 2:34
  Speaker 3: And that depends on your pot of money, on your health,
• 2:37
  Speaker 3: on your personal circumstances, if you have any other income
• 2:41
  Speaker 3: besides your retirement savings.
• 2:44
  Speaker 2: What happens if you draw too much, go too quickly?
• 2:48
  Speaker 2: I mean, presumably that can get serious quite fast. Yes.
• 2:52
  Speaker 1: Yes, and I think it's a very dangerous thing.
• 2:54
  Speaker 3: In the beginning, it probably doesn't feel like you, or
• 2:58
  Speaker 3: it doesn't feel so dramatic. It can feel that it's
• 3:03
  Speaker 3: sort of still, you're still managing your money.
• 3:05
  Speaker 2: I've still got plenty.
• 3:06
  Speaker 1: Yeah, you still have enough.
• 3:07
  Speaker 3: And it doesn't look terrible when you look at your balance.
• 3:12
  Speaker 3: But in 15 or 20 years time, that is when
• 3:15
  Speaker 3: the real damage sets in. And then it's almost too
• 3:17
  Speaker 3: late to turn back the clock and fix the fact
• 3:20
  Speaker 3: that you've taken too much money too soon. For example,
• 3:23
  Speaker 3: if you are withdrawing around 15%, you can draw up
• 3:27
  Speaker 3: to 17.5% out of your living annuity.
• 3:29
  Speaker 2: Right.
• 3:30
  Speaker 1: But just because you can doesn't mean you should. That's
• 3:33
  Speaker 1: the maximum.
• 3:34
  Speaker 3: But as an example, if you withdraw 15% out of
• 3:37
  Speaker 3: your living annuity, so say you have a million Rand invested.
• 3:41
  Speaker 3: So you're taking 150,000 Rand a year. Your income will
• 3:45
  Speaker 3: run out in about six to seven years. So retiring
• 3:48
  Speaker 3: at age 65, you can sit with no income by 72.
• 3:50
  Speaker 3: It's a very scary prospect.
• 3:54
  Speaker 2: And you use the word scary. And I was going
• 3:56
  Speaker 2: to ask, I mean, in the midst of anxiety, because
• 3:58
  Speaker 2: I think these are tricky times for people. You know,
• 4:01
  Speaker 2: there's issues around health. There's the change in your life.
• 4:05
  Speaker 2: You're not going to work every day. Everything is different
• 4:08
  Speaker 2: all at once. And I would think, getting some kind
• 4:11
  Speaker 2: of clarity with all these emotions buzzing around you must
• 4:16
  Speaker 2: be quite tricky. How do you, for instance, make sure
• 4:19
  Speaker 2: that your money continues to work and continues to grow?
• 4:22
  Speaker 2: Because it's possible, I would think, to be too cautious.
• 4:26
  Speaker 3: Yeah, that's very true. And we also see that with
• 4:29
  Speaker 3: our clients. When the markets get choppy, they are very
• 4:31
  Speaker 3: keen to switch into cash. And that's actually also a
• 4:35
  Speaker 3: really dangerous thing to do. It's almost more dangerous than
• 4:38
  Speaker 3: taking more risk in your investment. I'm not saying you
• 4:40
  Speaker 3: should take excessive risk in a retirement or in your retirement,
• 4:46
  Speaker 3: but it should be sufficient or the risk that you
• 4:48
  Speaker 3: take should be sufficient that you still get growth on
• 4:50
  Speaker 3: your investment because investment terms are so long.
• 4:54
  Speaker 1: You need growth.
• 4:56
  Speaker 2: We need to keep looking at what we have, what
• 4:59
  Speaker 2: the circumstances are, what we plan to do and all
• 5:02
  Speaker 2: those kinds of things. How does Discovery involve itself with
• 5:07
  Speaker 2: people who are on that journey? And what do you
• 5:10
  Speaker 2: believe you offer by way of products that maybe are different?
• 5:13
  Speaker 3: So now specifically in your retirement stage, Discovery Invest has
• 5:19
  Speaker 3: the Lifespan Linked Income Plan, which is basically a living
• 5:23
  Speaker 3: annuity plan. This is the product that I've explained where
• 5:26
  Speaker 3: you can withdraw from 2.5% to 17.5%.
• 5:27
  Speaker 1: Right.
• 5:28
  Speaker 3: And you manage the investment or you and your advisor
• 5:33
  Speaker 3: manage the investment. But where Discovery Invest comes in is
• 5:37
  Speaker 3: that we incentivize clients to withdraw carefully. So we would
• 5:41
  Speaker 3: give in this product up to 50% additional income per month.
• 5:47
  Speaker 3: to our clients depending on how they withdraw. So the
• 5:50
  Speaker 3: less they withdraw, the bigger the boost is that we
• 5:52
  Speaker 3: give to them every month.
• 5:55
  Speaker 1: On this retirement product.
• 5:57
  Speaker 2: And just finally, I mean, people go to their advisors and,
• 6:01
  Speaker 2: you know, they're not always sure what it is they
• 6:04
  Speaker 2: should be asking in order to get the very best
• 6:08
  Speaker 2: and crucially the most, the advice that fits their circumstances
• 6:13
  Speaker 2: the best. I mean, What are the key questions? Just
• 6:16
  Speaker 2: keep asking, I guess.
• 6:17
  Speaker 3: I think ideally you should be seeing your financial advisor
• 6:20
  Speaker 3: every year to discuss this with him. And then when
• 6:23
  Speaker 3: you are discussing it with him, anything that has changed
• 6:26
  Speaker 3: in your life, I think is important to mention in
• 6:29
  Speaker 3: terms of.
• 6:29
  Speaker 1: Health, financial situation or family situation.
• 6:33
  Speaker 3: And then just making sure that the level that you
• 6:36
  Speaker 3: are withdrawing at is still suitable, that your retirement income
• 6:39
  Speaker 3: will last and also how you are investing. if you
• 6:42
  Speaker 3: are investing at the right level of risk to get
• 6:45
  Speaker 3: the growth that you need. And I think that's something
• 6:47
  Speaker 3: that needs constant adjusting and sort of monitoring.
• 6:53
  Speaker 2: Yeah.
• 6:54
  Speaker 3: Okay.
• 6:55
  Speaker 2: Retirement, we're supposed to just be chilling. But anyway, make
• 6:59
  Speaker 2: good decisions, ask good questions, plan well, and you can
• 7:02
  Speaker 2: do as much chilling as you want. Thank you. SD7
• 7:05
  Speaker 2: Stair is head of technical marketing at Discovery Invest. You
• 7:09
  Speaker 2: could spend decades learning how to save, but retirement asks
• 7:13
  Speaker 2: a different question. How will those savings become an income?
• 7:16
  Speaker 2: Saving and drawing an income are separate decisions, and a
• 7:19
  Speaker 2: financial advisor can help you work through them. Discovery Invest
• 7:24
  Speaker 2: rewards responsible retirement behavior before and during retirement. Ask your
• 7:29
  Speaker 2: financial advisor whether your plan covers the move to income,
• 7:34
  Speaker 2: not only the date. Discovery Invest, retire strong. Vote at
• 7:38
  Speaker 2: South Africa's best investment experience. 2026 Ask Africa Orange Index.
• 7:44
  Speaker 2: Discovery Invest is an authorized financial services provider. Product rules,
• 7:49
  Speaker 2: eligibility criteria, terms and conditions apply.