How this couple is rethinking retirement with R25m in property and R10m in investments

David and Anna are in their late 50s and approaching retirement. They’ve built up a substantial balance sheet of R35 million – R25 million in physical property (split evenly between local and offshore) and R10 million in discretionary investments and retirement annuities.

So, where do they begin?

Retirement isn’t a single event. It’s a transition – emotionally, practically, and financially – that requires careful thought before making any large, irreversible decisions. The goal early on should be to retain as much flexibility as possible.

This isn’t a detailed plan but a framework for thinking about the next few years. It’s also applicable if you own a business instead of property, as these are both alternatives to market-based solutions.

Step one: What does retirement mean to you?

Do you have dependants – kids, parents, or others? If something happened to you, what would you want for them?

What’s your relationship with money? Did you grow up in a wealthy household, or was money always tight? Do you view wealth primarily as protection or something to be enjoyed?

And most importantly, what are you trying to achieve? What do you want from your life — and your portfolio?

These are subtle questions, but they shape everything: your risk tolerance, your investment choices, and how you define “enough”.

I’ve written about how these answers feed into portfolio construction here.

Retirement looks different for everyone. Some clients leave full-time work only to return later – consulting, starting businesses, or pursuing passion projects. Others want to fully step back and focus on lifestyle and family.

Since David and Anna built their wealth through property, they may feel most comfortable using it to fund their retirement. That’s perfectly valid. But it’s worth asking: is this how they want to structure the next chapter?

Property as a retirement strategy

Assume their R25 million property portfolio produces a net yield of 7%. That’s about R1.75 million per year in income.

That sounds great – but how stable is it? What are the tax implications, especially with offshore income?

They’re in the best position to answer that. They understand the work involved in managing the properties, the reliability of the income, and the tax and estate planning implications – particularly with international holdings. That introduces complexity: estate laws in multiple jurisdictions, winding-up delays, and logistical issues for executors.

Do their wills account for this? Are their children prepared to inherit a property empire?

The market-based alternative

Alternatively, a R35 million investment portfolio could generate R1.4-R1.75 million per year, based on a 4-5% withdrawal rate.

• A 4% withdrawal rate has historically resulted in a near-zero chance of running out of money over 30 years.
• At 5%, the risk increases modestly – to around 10% – but it may still be acceptable depending on their goals.

I’ve written about how the Guardrails Framework helps retirees spend confidently. There’s a lot of research that goes into the asset allocation and withdrawal strategy. Our job is to apply that research to give you the highest probability of success – and to help you understand the thinking behind it so you can make better decisions.

But there’s a mindset shift involved. Unlike property, investing in markets means becoming a shareholder in businesses like Microsoft and Apple. You’re not managing tenants – you’re trusting leaders like Tim Cook and Satya Nadella to build long-term value.

It’s a more passive approach – but a powerful one. You hand over the keys to some of the most successful business operators in the world. Personally, I find that comforting and lower risk.

But for some clients, that loss of control can feel uncomfortable at first.

What the market can (and can’t) do

Markets are unpredictable in the short term. Over my career, I’ve allocated close to half a billion rand into markets – much of it offshore – and I’ve seen that those who try to time currencies or market cycles often come off worse.

Ironically, the clients who don’t overthink it – who simply say, “just get it done” – tend to do best. They avoid emotional decisions, and that’s a real advantage.

We follow the Warren Buffett-Charlie Munger philosophy: invest in great businesses with strong balance sheets, wide moats, high returns on capital, and consistent earnings.

Don’t try to time the market. Don’t chase alpha. Fortunes have been lost that way.

The market’s long-term returns are more than good enough to meet most retirement goals. Once you see markets not as something to beat but as a tool to leverage your wealth, your perspective shifts – and that shift is powerful.

Your choice – or a bit of both

So, should David and Anna shift into markets or stick with property?

There’s no single answer. Some people prefer to stay with what they know. If they do want to reduce their property exposure, the best approach might be to do so gradually – over five to 10 years.

That said, I believe markets – when used responsibly – are incredibly effective. They require far less effort than running a property empire. And in many cases, they carry less long-term risk.

If you’re sitting with a complex balance sheet and wondering what comes next – you’re not alone. The right path forward starts with asking better questions and staying open to the idea that there’s more than one way to retire.

If you’re approaching retirement and would value a thinking partner, feel free to reach out for a complimentary 30-minute virtual call. Sometimes just hearing an alternative perspective can give you peace of mind that the decision you’re making is the right one for your circumstances.