In your early working years, you probably pictured retirement as the moment life finally opened up and every day’s a weekend. You might have imagined quality time with the people you love, mornings on the golf course, long stays in a cottage by the sea, or afternoons lingering over coffee at a sunlit café on a cobblestoned street abroad. Perhaps you dreamt of new hobbies, mastering French, or taking up skydiving, because time was finally on your side.
Chances are, you spent more time dreaming than thinking about how you’d actually get there. Yet, as in life, ignoring the details has a way of catching up with you — and nowhere is that truer than in retirement. Overlook the fees you pay on your investments, and you could one day wake up to find they’ve cost you far more than you ever imagined.
And what a difference a single percentage point, or two, can make.
- Did you know you can chat to a retirement expert at 10X Investments and get the facts about your retirement investments, at no charge to you? Get in touch today.
What’s eaten your savings?
If you’re saving for retirement, or already drawing an income, you might find that you’re paying too much in fees. Many South Africans are charged two to three times more than necessary. Over a lifetime, that hidden drain can strip hundreds of thousands, even millions, from your nest egg — money that should have been yours to spend in retirement.
The retirement savings and investments industry doesn’t make it easy to see. Fee structures are buried in multiple line items, and statements focus on growth without showing what you actually keep. Unless you interrogate the fine print, you won’t see the long-term impact.
- If you found the above video helpful, you can get more industry-leading insight and actionable, retirement-focused content on the Rands&Sense by 10X Hub.
Why fees matter so much
Take Tshepiso from Pretoria: she’s charged 0.75% for advice, 0.25% for administration, and 1.5% for investment management, which adds up to 2.5%. In some instances, the total is closer to 1%.
A difference of 1.5% may look small, but compounding makes it brutal. If Tshepiso keeps paying 2.5% instead of 1%, she could forfeit hundreds of thousands of rand, which is as much as 30% to 40% of her eventual retirement wealth.
Some South Africans are invested in balanced funds — ready-made portfolios mixing shares, bonds, property and cash. These funds are designed to deliver steady, inflation-beating growth of about 5% to 7% a year. In this scenario these margins are slim, and every percentage point lost counts. For example, if your fund earns 6% but 2% for fees disappears in costs, you could be giving up a third of your growth. It’s also important to consider if the product you selected is appropriate for your needs.
The million-rand mistake
Let’s run the numbers. Consider the example of Marilise, who saves R5,000 a month for 30 years, earning 8% a year before fees.
- At 1% in annual costs, she retires with R4.1m.
- At 2.5%, she retires with R3.2m.
That’s nearly a million rand gone, swallowed not by bad returns but by costs.
And the damage continues after retirement. Say you retire with R4.8m and draw R20,000 a month (a 5% withdrawal). In a high-fee scenario (3%), you are paying R12,000 in fees a month — 60% of what you’re paying yourself. At 1%, you are paying R4,000 in fees, but you keep far more of your own income working for you.
- 10X Investment's experts can help you understand what your fee options are — speak to a consultant today at no cost to you. You can also use the 10X EAC calculator to find out what you're really paying.
Behaviour makes it worse
Fees are the structural problem, but behaviour magnifies it. Many South Africans cash out a portion of their pension when changing jobs, delay saving until their 40s or 50s, and treat retirement contributions as optional extras.
Market swings can tempt investors into costly moves. In 2008, during the global economic crisis, and again in the 2020 pandemic, many people panicked and switched portfolios, which meant locking in losses at the worst possible time and often paying extra fees for the switch. Those who stayed invested and kept contributing towards their investments avoided those costs and benefitted when markets recovered.
That same discipline, of paying your future self first and keeping fees low, is what sets apart the retirees who are secure in their later years from those who fall short.
Take back your power
The first step is knowing your Effective Annual Cost (EAC), which is the single figure that captures every charge, from management and advice to platform and exit fees.
This number should be shown upfront on every client statement, alongside both gross and net returns, because what you keep is the only number that truly matters.
Here are some of the different types of fees you may be charged:
- Upfront fees: Some products charge 3% to 5% upfront. On a R100,000 investment, that’s R5,000 gone before you even start investing.
- Portfolio access fees: A small fee to get access to some more “exclusive” portfolios.
- Admin or platform fees: Extra fees sometimes levied for services provided.
- Performance fees: “We only charge extra when we perform well” sounds fair until you realise these often apply even when the fund underperforms its benchmark.
- Switching fees: Want to change your asset allocation? That’ll be R500 to R1,000 per switch, thank you very much.
- Exit fees: Leaving for a better provider? Many traditional retirement annuities charge termination penalties of up to 30% of your investment.
- Other fees: A vague term that could cover marketing or other tangential costs.
- Hidden advice fees: Even if you never speak to an adviser, you might be paying ongoing advice fees of 0.5% to 1% annually.
To find out what you’re really paying, calculate your EAC today using the 10X EAC calculator.
Once you’ve calculated your EAC, compare it. Ask your provider to explain every charge. Research low-cost alternatives like 10X Investments. Consider the best option that suits your needs and lifestyle. Even if switching feels complicated, the long-term savings usually make it worthwhile.
And don’t be swayed by glossy marketing that promises “active management” or “superior service”, because they are often just code for higher fees. Shop around, run the numbers, and act quickly.
The 10X difference
10X believes retirement savings should be simple, transparent and affordable. It charges low, all-in fees with no hidden extras, and every client has a clear view of what they’re paying and what they’re earning.
Tools like the 10X EAC calculator and 10X’s free comparison reports show you exactly how much better your future could look by switching providers.
You can’t control markets, but you can control fees, and that may well be the most important financial decision you ever make.
Stop wrecking your retirement
If you’ve never calculated your fees, chances are you’re giving away a third of your growth. Your financial future can be impacted by high costs.
By understanding the fee implications and moving to a provider that puts transparency first, you could save millions over a lifetime. Retirement should be about peace of mind, not regret. And after a lifetime of work, your retirement savings belong to you, not your provider.
- Feel like your investments could be doing more for you? Get a free comparison report from 10X Investments.
This article was sponsored by 10X Investments.
The content herein is provided as general information and does not constitute financial advice. 10X Investments is an authorised FSP (number 28250). The 10X Living Annuity is underwritten by Guardrisk Life Ltd.
The information herein is not intended as advice on any particular product or investment decision. Investors should obtain independent financial advice before making changes to their retirement arrangements.
Past performance is not guaranteed; actual returns vary with market conditions.
