Many pensioners struggle to make ends meet. Here's why, and what to do about it.

Question

My wife and I retired seven years ago and are finding it increasingly difficult to come out on our budget. What should we do?

Answer

Many pensioners are in the same situation as you. There are two main reasons:

Pensioner inflation is higher than your pension increases

Items like medical aid premiums and electricity, which make up a significant part of a typical pensioner's budget, have increased a lot more than your pension has increased.

Your investments have a short-term focus

The portfolios that many pensioners use aim at preserving capital in the short term. The problem is that there is not enough long-term growth.

advertisementDon't want to see this? Remove adsBecause one in 10 of us is likely to live to the age of 100, we need to ensure that the funds can last for 30 years.

Here are some solutions that you can consider:

Restructure your living annuity portfolio

You need to introduce a growth element into your investment portfolio. A model that I use for some of my clients is as follows:

Each year, you should rebalance this portfolio with the help of your financial planner.

Another option that you can consider is to...