Making informed money decisions and managing your finances will improve your well-being. This will lower your day-to-day cost of living during your working life, and set you up for a comfortable retirement later in life.

However, being actively involved in your finances doesn’t stop when you’re retired, even if those annuity payments are reassuringly frequent and constant! Three retirees, Re-tired, Rodney and Gert share their tips on managing money for the inevitable time when you stop working.

Establish good money habits now

“If you are unable to manage your finances before you retire, it will be impossible to manage your finances during retirement, so get into the habit as soon as possible,” says Re-tired.

Drawing up his budget for the year helps him interrogate every single bill that comes his way. “This has helped me to make considerable savings.”

Another not-to-be missed strategy is pensioners’ discounts. Re-tired’s advice is to make use of this money-saving opportunity whenever you can, with a lot of shops offering it in some form. “If you don’t know if a pensioner discount is available, just ask.”

Re-tired uses his discretionary savings to buy in bulk and pay lump sums in advance if it means that he can benefit from a discount. He then pays the money he’s saved back into his discretionary savings account every month. Brilliant!

In terms of Re-tired’s draw-down rate, his target is to stay below 2.5% per annum. “I used to work on the 4% rule, but when you take fees into account (in my case just under 1% with 10x), you are effectively drawing down nearly 4% but only ‘earning’ 2.5% for yourself. If you are using a company charging higher fees, you need to be very careful of your draw-down rate.”

Cut fees and pay it off

Rodney’s money management advice for retirees is something we all know we should do: Lower your bank fees, car and household insurance. It might take some lunchtime admin (a phone call, a lower quote from a competitor), but it will be worth it.

“I also made sure my property was fully paid up before I retired. I did spend a bit of money on a demo car when I was still working, but I managed to pay it off two years before I retired.”

Rodney and his wife are not trying to leave retirement money to their children when they pass away. “If there is money left, then great. I will however leave my property and discretionary savings to my children.”

Do some financial housekeeping

Like Re-tired, Gert believes that the most important approach to money management is to draw up a budget. And of course, to stick to it as close as humanly possible. “I got rid of a lot of unnecessary monthly expenses. So much so that at the end of every tax year, I was able to use some of my savings to fund additional RAs. I plan to convert these to living annuities, if and when absolutely necessary.”

To preserve the funds in his living annuity, Gert opted for a withdrawal rate of around 4.5%. He also took up beekeeping as a hobby, which provides an additional source of income. This lowers the pressure on his annuity draw-down.

The overall message is clear; it is never too early to start planning your finances for retirement. There are smart methods you can use before and during retirement to ensure you live a wonderful life once work is no longer a major part of it.

Saving for retirement is the biggest investment most of us will ever make. Sadly, it can also be very complicated. In this monthly blog, Carina Jooste responds to common retirement questions, ranging from which products are best suited to different circumstances to efficient tax treatments.