Alternative retirement strategies

Alternative retirement strategies

It’s no longer sufficient to simply rely on the old-school path to retirement. We need to look at alternative retirement strategies. If you’re wondering why I say this, then read on!

The traditional retirement strategy

I think that everyone knows the traditional retirement strategy. It’s quite simple…

  • Work hard
  • Save as much as you can
  • Hope that you have enough when you retire so that you can live comfortably

We’re taught this by our parents from a young age but the sad reality is that most of our parents aren’t in a great financial position in their retirement. In fact, most people barely scrape through their retirement and it’s nothing like what they had hoped and dreamed for. That sounds a bit depressing, but have a look at some of these links, or just Google the phrase “retirement statistics South Africa”.

Why only 6% of South Africans can retire comfortably – MoneyWeb

Retirement crisis could get worse – MoneyWeb

Retirement? Just forget about it! – Mail & Guardian

Retirement savings in America – CNBC

It seems to me (based on personal circumstances, reading & research) that the traditional retirement strategy doesn’t work very well. At least, it can’t be relied on solely.

The three main factors in the equation are:

  • Length of investment (the earlier you start saving, the better)
  • Growth (the more interest you earn, the more your money grows)
  • Amount of savings (how much you can save each month)

So, what if you didn’t start saving for retirement at age 20? What if you don’t actually earn enough to invest more? What if your companies pension fund has high fees and low interest which erodes your money?

There are many factors that are out of our control. If you didn’t start saving 10 years ago there is nothing you can do about it now. And if your prescribed pension fund has high fees, tough luck. If you can’t afford to save more, well you can squeeze the budget and get a little more, but will it really help?

Have you searched for Retirement Planning calculators? They’re great you can enter your age, current investments, planned retirement age, etc and it will calculate whether you are contributing enough each month. Chances are that you are not on track and the extra amount that you need to save is beyond your means.

Depressing right? Unless you are in the small percentage of top-earners who can invest loads each month, the chances of you retiring well are not great. So what now?

Alternative retirement strategies

Here is something to think about; to add onto your existing plan or to motivate you to start a plan! You need to know where you’re headed and you need a goal! So, add this alternative strategy to your planning.

The simplistic watered-down plan is as follows:

  • Retire with no debt
  • Minimize your monthly expenses
  • Create income streams to cover those expenses (and more)

This might sound unachievable, crazy, scary, unreliable, etc but let’s get into a bit more detail and then think about it for the next few days & weeks. Also look at your current retirement situation and decide whether you really are on track or not. This strategy does not need to replace your current plan, but it can supplement it.

Also have a look at Retirement Planning in Uncertain Times.

Retire with no debt

Simply put, by retirement age you should have no debt at all (no home loan, car finance, credit cards, etc). Of course, why wait until you’re in your 60’s to be debt-free? You need to focus on this now and come up with a plan to pay your debts!

The great things about being debt-free are:

  • No burden of stress about debt and how you are going to pay
  • You can manage your expenses better as there are no unexpected debt payments
  • All your monthly income is yours
  • You aren’t wasting money on fees and interest payments
  • The process of becoming debt-free will teach you invaluable life-lessons!

Being debt-free is essential to financial freedom and should really form a critical part of your financial planning and retirement strategy.

Minimize your monthly expenses

This is quite self-explanatory. Minimize the money you need in order to live. This may mean some negotiating with your insurance company, changing habits, deciding on priorities and generally finding the things that are really important to you.

Knowing how much you need is a very important aspect of your retirement planning – whether you are looking at traditional methods and calculators or trying to forge your own strategy. You need to know how much you need, and you need to cut out the unnecessary stuff.

Create income streams

This is probably the most controversial section of the post. Imagine investing less money into your retirement and rather spending it on education and building income streams for yourself? This seems crazy, but what if you could learn how to make money other than a standard office job? What if you could create an income stream that would see you through your retirement?

My parents are debt-free and have minimized their monthly expenses but they have no income. My mom still works but as soon as she stops working, the income stops and we’ll be in a crisis situation. It would have been far better if they had spent the time and money to learn how to create an income stream of sorts. Any income right now would place them in a far better situation! Even if they simply had an extra R2,000 each month it would be great!

I’m not going to prescribe what you should be doing or how you should go about creating an income stream. There are literally endless possibilities! I would however strongly encourage you to spend time & effort learning, trying and ultimately creating something!

Blogging could be fun but here’s a pro tip…. It takes a lot of time to build up into something worth-while. However, it’s been a great experience for me so far! See this for starting a blog in South Africa.

What will the difference be between investing R10,000 into your retirement fund, or investing R10,000 into your own financial education? That’s a trick question because it’s obviously impossible to calculate. However, I think we underestimate our own abilities and opportunities to make money. I feel we don’t believe in ourselves enough. We’re happy to give our money to large investment firms and hope that they will manage it well enough in order for us to retire well.

I am a firm believer in investing in oneself in order to learn how to make more money, manage money better and take charge of our own future.

So please note that when I am talking about “investing in yourself” I don’t simply mean finding a MLM scheme to join or paying some charlatan for his “make millions in Bitcoin” course. I am referring to formal education or seminars form respected business folk who have real knowledge to share.

I attended a few property investment courses a number of years ago and although they were expensive, its paid off!

In closing

As mentioned in previous posts, I’m generally risk-adverse. I do have some retirement savings, but I definitely don’t have enough according to traditional calculators. I actually think it is risky to rely only on a standard retirement plan and hence the need to look for alternative retirement strategies.

There’s no quick and easy way to just make money, and there are lot’s of scams out there. Also lot’s of nonsense in the form of e-books on making money, working from home and “magic” blogging guarantees.

Find trusted sources and educate yourself. It really is not that hard to generate an income stream and once you have done it once, it gets easier and more believable.

Alternative retirement strategies could also include investing in assets that you plan to sell later. Rare and collectable coins, art, gold and precious metals, vintage cars, antiques, etc. These carry their own risks but if you are knowable in a certain area, best use that knowledge to your advantage.


  1. After 30 years as a financial planner I have learned only recently that debt management is the key for post-baby-boomers and retirement planning. This is an excellent alternative plan for people born 1957 or later, with no pension plans, too much debt, and a habit of consumerism that works against getting financial control.

    1. Thanks so much for the great comment! Didn’t write it with any specific generation in mind, but I guess it is relevant for post-baby-boomers. Things certainly change with each generation and new considerations should be made in the financial planning.

  2. Pingback: An Alternative Retirement Strategy ⋆ Camp FIRE Finance
  3. I agree. Retire all debt first, and then create income streams such as a dividend stock portfolio OR what’s been written about here (Real Estate Crowdfunding):

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