What should you prepare in the year before retirement?
Confirm retirement income, payment dates and paperwork before your salary stops. Start with a budget and benefit inventory.
Twelve to nine months before retirement
Obtain benefit statements, process details and required documents from the employer and each fund. Confirm whether employment retirement, fund retirement and annuity commencement must coincide.
Build a budget from actual spending. Remove costs that end, replace lost benefits and schedule repairs and vehicle replacement. Separate essential spending from costs you could reduce.
Test the proposed after-tax budget while earning a salary; save the difference towards the transition reserve.
List assets and debts with owners, access conditions and purposes, including old employer funds, preservation funds, RAs, offshore assets and policies. Identify what can fund the first month.
Nine to six months before retirement
Compare income options using the same assumptions. Annuity quotations should specify escalation, spouse benefits, guarantee periods and fees. For a living annuity, examine how the proposed income could behave under weaker returns, higher inflation and a longer retirement.
Test each survivor’s income and an expensive first year, when moving costs, repairs and replacement medical benefits may coincide with lost salary.
Obtain the cash and tax calculation for each fund component.
SARS’s tables and aggregation rules explain which earlier benefits count.
Choose the cash amount because it serves a purpose. Taking the maximum available can reduce the capital producing future income; taking too little can leave an avoidable liquidity problem. Use the Library guide to retirement fund cash to work through that decision.
Confirm how much must become retirement income
Compulsory annuitisation means the part required by the rules must provide a pension or annuity. Under the component system, the retirement component generally funds income; cash rights in the vested and savings components depend on their rules. The applicable small-benefit annuitisation threshold increased to R360,000 from 1 March 2026. Ask the administrator which benefits enter that test and what cash is permitted. SARS’s directive guidance explains the component and threshold treatment.
An ordinary living annuity permits an annual income election between 2.5% and 17.5% of its investment value, normally changed at the policy anniversary. Ninety One’s product rules describe that range. The legal maximum can consume capital quickly; it is not a sustainable spending target.
The living-annuity commutation limit is now R150,000: the remaining value must be below the prescribed limit for full cash commutation. The 2026 notice changes the limit. This is separate from both the retirement annuitisation test and the tax on a lump sum. Have the provider apply the current rules to all relevant policies.
Six to three months before retirement
Create a last-salary-to-first-pension calendar covering transfers, debit orders, premiums and tax. Confirm processing times and fund any gap.
Suppose retirement spending is R30,000 a month. A possible two-month payment gap and R25,000 of one-off transition bills imply R85,000 of planned expenditure before allowing for other emergencies. That reserve comes from the payment calendar; it is not a universal cash rule.
Keep the planned transition money accessible and appropriate for a short horizon. Review the investment allocation supporting later income separately. Moving the entire retirement portfolio to cash because the salary is ending can create a different long-term problem.
Review medical cover, life cover and disability benefits that may change when employment ends. Check the wills, beneficiary nominations and family contact list. Resolve outdated bank details and identity records before submitting benefit instructions.
The final three months
Assemble a document index containing:
- Identity documents, tax number and verified banking details.
- Current fund statements and retirement instructions.
- Annuity quotations, chosen terms and written fee disclosures.
- Records of earlier lump sums and retirement contribution tax certificates.
- The household budget and payment calendar.
- Wills, beneficiary records and contact details for the people assisting you.
Send sensitive documents only through a provider’s verified process. Give family members the information needed to help locate records; keep passwords and security codes out of a general document folder.
Retain acceptance of each instruction and track outstanding dependencies. Stress any planned asset sale for a delay or lower price.
After the first payments arrive
Reconcile the actual income, deductions and spending with the plan. More than one income provider can create a tax shortfall if withholding does not reflect total taxable income. Check this with your tax practitioner before treating every rand received as spendable.
Confirm the instructions before the last salary
Ask each provider for written access and payment rules and your authorised adviser for a suitability assessment of the actual income options. A tax practitioner can reconcile earlier benefits with the SARS lump-sum tables. The examples here help organise the decision; they do not select a product, a withdrawal percentage or a cash amount for your household.
Your next step
Obtain accepted fund instructions and test the payment calendar, tax and each survivor’s income; if the numbers still work, proceed with the reviewed retirement date; if not, adjust while you still can.