Picture: 123RF/DAVID FRANKLIN
Picture: 123RF/DAVID FRANKLIN

In the past couple of months, I have met with an inordinate number of men and women who have suddenly found themselves on the doorstep of mandatory retirement. No-one is ever completely ready for retirement, but it seems like there is a new wave of people who are at, or close to, retirement age and who are realising they are not financially ready for it.

These concerned executives ask if they really must retire. Invariably, they question the practice of forced retirement at a certain age.

To address this, let us first clear the legal hurdle. There is no mandatory retirement age in the Labour Relations Act, and it actively prohibits forced retirement owing to age. This is considered an act of discrimination and can easily be challenged in court.

The act does, however, make provision for a mandatory retirement age if it was written into an employment contract or if there is an accepted practice in the company that has been consistently applied to date.

The act also allows for a mandatory retirement age if this is written into a company-wide retirement policy or in the company's retirement fund's rules and regulations.

If there is no company rule, you can continue to work for as long as you can do your job professionally.

But even if there is an obligatory retirement age, you may still have some options available to you.

The first option is to change from being an employee to acting as a consultant. Many companies retain the services of professionals with specialist skills or unmatched industry knowledge.

If you find yourself in this position, create a company and set up the necessary VAT or other tax structures to be able to immediately transfer from earning a salary to invoicing the company for your services.

You can also spread your net a little wider and look at other companies that may need similar services.

If you have a restrictive restraint of trade, cast your net even wider to include unrelated businesses, universities (as a lecturer in your field of expertise) or certified training providers. Include your soft skills — like your ability to manage people — along with any specific specialist skills.

Looking even further than consulting, you could consider turning your profession into a small business.

Did you do the company books? Then why not start a small accounting or tax practice? If you were in administration you could look into freelancing your services to small and medium-size businesses for a few hours a week.

If you are considering starting your own business, be careful not to use a significant portion of your life savings as start-up capital.

Remember that businesses are more likely to fail than survive, and you cannot risk your life savings if there is even a small chance of failure.

Circling even wider, consider turning your passion or hobby into a side hustle and earn some extra income. I know of an engineer who is also a passionate gardener and who is now consulting on company gardens, while making special orchid mulch for growers in his back yard.

Whatever your plan, it is important that you don't see your retirement date as a destination.

Scholar and business author Rabbi Daniel Lapin uses the analogy of a pro boxer seeing his target as some distance behind the opponent's face.

By doing this, his hand is still accelerating when he hits his opponent on the nose.

If you see your retirement age as a destination, you will most likely start winding down before you reach that date, whereas you could be accelerating into a new job as a consultant or business owner.

And it would be remiss of me not to mention the important role a financial adviser can play in helping you prepare for life after formal employment.

Fourie is a past winner of the FPI Financial Planner of the Year competition and co-author of The Ultimate Guide to Retirement in South Africa and the coming Secure Your Retirement — How to beat the effects of corruption, ratings downgrades and a global pandemic. He is the CEO of Ascor Independent Wealth Management

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