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By Maria Smit*
Do you picture yourself entering retirement without the burden of loans or credit card debt, or is your reality a bit more harsh? For many South Africans, the reality isn’t very often a debt-free one, but it doesn’t have to be that way.
I’d like to share with you how you can have a debt-free retirement with some smart planning and disciplined action. If you’re willing to make a few short-term sacrifices, I can guarantee that your long-term future will be far brighter if debt isn’t eating into your retirement income.
1. Starting your debt-free journey
Here are the first few steps that will help get you to your debt-free goal by retirement:
- Focus on high-interest debts first
Pay off debts like credit cards before anything else – this will save you thousands in interest.
- Prioritise retirement savings
Contribute to your retirement fund, especially if your employer offers matching contributions –this is essentially free money!
- Build an emergency fund
A safety net of three to six months of living expenses means you can avoid taking on new debt in case of emergencies.
- Get professional advice
A financial advisor can help create a plan that’s tailored around your specific circumstances, which makes your goals clearer and give you peace of mind.
Not all debt is created equal. “Good” debt, such as a home loan, may have potential returns. For instance, if you own a property that generates rental income, the interest paid on the mortgage might offer tax deductions.
However, high-interest debts, like personal loans and credit cards, should be avoided at all costs, especially when you’re living on a fixed income.
2. Making the most of extra income
If you find yourself with some extra income – whether that’s a bonus, inheritance or another one-off windfall – consider using that to pay off debt as well as boost your savings. For example, contributing to a retirement annuity (RA) is a smart move because you receive a tax deduction, while paying off debt offers no such advantage. Let’s break this down:
Imagine two people who each receive a bonus of one month’s salary in December, totalling an annual income of R520,000 including the bonus. Both have R50,000 in credit card debt.
– Person 1 contributes the bonus to an RA.
– Person 2 pays off the debt directly.
Here’s what happens:
– Person 1 gets a SARS refund of R12,760 by contributing R40,000 to their RA. This means they can use that refund to pay off some of their debt and still boost their retirement savings.
– Person 2 simply pays off R40,000 of their credit card debt.
By investing in an RA, Person 1 ends up reducing both their debt and boosting their retirement funds, while Person 2 only manages to pay off some of their debt.
To pay off your debts effectively, I suggest making a list of all your outstanding balances and ranking them by interest rate.
Start by paying the minimum on each, then put any extra income to paying down the debt with the highest interest. This strategy, often known as the “avalanche method,” means you save in the long run because you’re reducing interest repayments.
3. Creating a safety net and consulting experts
A solid financial plan for retirement isn’t just about paying off debt – it’s also about ensuring you’re prepared for the unexpected.
The best way to do that is to set aside an emergency fund that covers three to six months of living expenses. You should also consider different types of insurance to add an extra layer of security.
This can seem daunting because there’s no way to predict the future. Which is why an outside viewpoint from an expert financial advisor can help put things in perspective so that you’re happy with the decision you’re making.
Once you’ve cleared your debts, you can then focus on building wealth. Obviously, you want to make the most of your company pension plan, if you have one, or retirement annuities and funds if there is no company plan.
A smart way to start making extra investments for your future is to make full use of your tax-free savings account. There are many benefits to this, with the exemption from dividends, capital gains and other taxes being the most attractive.
Once you’ve maxed out that option, it’s worth considering other tax-efficient structures for further investments, such as retirement annuities or unit trusts. Doing so can also help you to further diversifying your investments so that your risks are spread as widely, as wisely, as possible.
I get that reaching retirement debt-free takes a lot of effort and planning, but it’s worth every sacrifice. Imagine a future where you’re free to focus on what truly matters to you. You can, and you can start today by speaking with a financial advisor who can help to map out your debts, and set your plan in motion.
Your future self will thank you.
* Maria Smit CFP® professional is an advisor at Brenthurst Pretoria
Megan joined the Brenthurst Wealth team in March 2026 as an Administrative and Fiduciary Services Assistant at our Val de Vie Office in the Western Cape. Prior to joining Brenthurst, Megan gained three years of experience in the retail sector, where she developed management and client service skills.
I obtained my National Diploma in Financial Information Systems from the Cape Peninsula University of Technology in 1999 and have worked in the wealth management industry since January 2000. Over the years, I have gained extensive experience in various roles, including Portfolio Manager Assistant, Planner Assistant, and Paraplanner.
Esmarelda Isaacs-Andreas joined the Brenthurst Wealth Stellenbosch office in October 2025, taking on the dual role of Receptionist and Fiduciary Administrator.
I obtained my National Diploma in Financial Information Systems from the Cape Peninsula University of Technology in 1999 and have worked in the wealth management industry since January 2000. Over the years, I have gained extensive experience in various roles, including Portfolio Manager Assistant, Planner Assistant, and Paraplanner.
Ashley joined Brenthurst Wealth in January 2025 as Office Administrative Assistant and Receptionist for the Stellenbosch Office.
René Heystek joined Brenthurst Wealth in November 2023, as receptionist and administrative assistant in the newly established George/Garden Route office.
Michelle Heystek has built a career in the financial services over the last two decades, after obtaining her B.Com degree in Financial Management in 2005. Once she joined Brenthurst in 2006, she continued her academic journey, obtaining her Certificate in Wealth Management from INSETA in 2007, followed by a Postgraduate Diploma in Financial Planning from the University of the Free State. In 2008, she earned the Certified Financial Planner (CFP®) designation.
Anelle joined Brenthurst Wealth as a Receptionist and Administrative Assistant to Brian Butchart in the Cape Town office in December 2023. She has a wealth of knowledge from working as a liaison between Financial Advisers and clients at TMA and Absa Investment Management Services (Aims) since 1998. She obtained her B. com degree from the University of Port Elizabeth in 1997.
ADMITTED ATTORNEY | FINANCIAL PLANNER & HEAD OF BRENTHURST FOURWAYS
Sanet was appointed in April 2020, joining our Cape Town team as an Executive Administration Assistant to Renee Eagar. She has been in the financial services industry since 1990. Her previous experience includes positions at Sanlam, BJM and ABSA. She spent her last 12 years working at Alexander Forbes Private Client Wealth as a Senior Wealth Management Assistant. She has received numerous accolades over the years which include but not limited to, Alexander Forbes Client Service Excellence – Silver award in 2014,2015 and 2017. Sanet has also obtained her Certificate in Wealth Management (NQF 5) in 2012 and achieved “Best Student of the Year” from Moonstone.
Maria Smit is a Certified Financial Planner® with over 10 years of experience in the financial planning industry.
