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Financial Planning
06 minutes

Cash flow, longevity, and the real retirement challenge

Retirement planning isn’t just about returns, it’s about sustainable cash flow. This article explores how PPS reframes retirement as a lifelong income journey, tackling sequence risk, longevity, and behavioural pitfalls with flexible, resilient investment strategies.
Written by
Max Mojapelo
Published on
October 17, 2025
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When financial advisors talk to clients about retirement, the conversation often begins with numbers, models, and market returns. But as Max Mojapelo, Executive for Investment Solutions at PPS, reminded me in our recent discussion, the essence of retirement planning is far simpler, and far more complex. It all comes down to cash flow.

Two assets across a lifetime - Mojapelo frames the journey to and through retirement in terms of two assets. The first asset is you: your skills, expertise, relationships, and energy, all of which generate income during your working life. This cash flow, salaries, bonuses, or business profits, sustains your lifestyle.

But as time goes on, that first asset inevitably declines. Your ability to generate new income diminishes, and the second asset needs to take over: the portfolio you’ve built through decades of saving and investing. Pre-retirement and post-retirement, then, are not separate conversations. They’re one continuous story of converting today’s income into tomorrow’s security.

For advisors, that means the focus should always be on optimising cash flow across both phases. It’s not just about saving, but about understanding assets, liabilities, and tax implications, and ensuring that every stage of a client’s journey builds towards sustainable income later in life.

The sequence of returns dilemma - If pre-retirement is about building, post-retirement is about protecting. And here, Mojapelo highlighted the single biggest challenge retirees face: sequence of returns risk.

Markets never deliver returns in neat, linear patterns. Instead, they swing, positive, negative, volatile. For an investor still contributing regularly, these ups and downs average out over time. But for a retiree drawing down from a single “nest egg,” the sequence of those returns matters enormously.

“If you retired in December 2015, the weekend of the finance minister debacle,” Mojapelo explained, “and started drawing income just as bond funds crashed, your entire retirement experience would look very different to someone who retired a few months earlier or later.” A 20–30% capital drop at the wrong moment, combined with income withdrawals, can make it nearly impossible to recover to the original balance.

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"Behind every retirement plan should be one goal: sustainable income over decades, not just short-term stability."

Max Mojapelo
Executive, Investment Solutions, PPS

That’s why PPS focuses less on market volatility and more on the probability of income shortfalls. Post-retirement portfolios are constructed not simply for risk-adjusted returns, but to protect against the devastating impact of bad timing. This means including flexible strategies, hedge funds, and growth assets in ways that smooth outcomes and prioritise sustainability over decades.

Longevity shifts the equation - If sequencing makes retirement fragile, longevity magnifies the challenge. Traditionally, a working life of 40 years funded roughly 25 years of retirement. But today, professionals are living far longer, sometimes as long in retirement as they spent earning.

Using PPS’s own membership data, Mojapelo pointed out that South African actuarial tables underestimate the reality for professionals, who tend to live healthier and longer lives. Male members can expect an extra decade compared to national averages, while female members may live 40 years beyond retirement age. For married couples, this means portfolios often need to sustain not just one, but two extended lifespans.

“This creates a dislocation,” Mojapelo said. “You had 40 years to build the asset, but now you may need it to last another 40. Even with good compounding, the maths is difficult when contributions are typically only 15–20% of income.”

The implication is clear: advisors must plan not for 25 years of income, but potentially double that, and still preserve the option of leaving a legacy.

Behaviour and flexibility - Of course, even the best investment design can be undone by behaviour. Clients who demand higher drawdown rates than their portfolios can sustain put themselves at risk of shortfalls. This is where PPS works hand-in-hand with advisors, equipping them with tools to show clients the real trade-offs.

Solutions are structured to provide income targets at 3.5%, 4%, and 4.5% withdrawal levels, incorporating fees and market assumptions. Advisors can then illustrate to clients: higher withdrawals today reduce the probability of sustainable income tomorrow.

Beyond drawdown discipline, PPS also integrates tax optimisation and the unique benefits of its profit-share model. Members accumulate additional assets through profit-sharing over their careers, sometimes amounting to half a million rand or more by retirement. These extra reserves, alongside flexible product structures, provide meaningful buffers against both sequencing and longevity risks.

The advisor’s role - Ultimately, Mojapelo emphasises that advisors must see retirement as a single, integrated cash flow journey. The responsibility is not only to select investments, but to model scenarios, manage client behaviour, and anticipate the realities of longer lives.

“Pre and post aren’t two conversations,” he stressed. “They’re one flow. Advisors need to understand the assets, the tax, the liabilities, and ensure that every phase optimises for sustainable income.”

For professionals, who may live decades longer than national averages and whose spouses often outlive them, the stakes are even higher. Retirement is no longer a 25-year problem.

It’s a 40-year challenge, and only careful cash flow planning, robust portfolio construction, and disciplined behaviour can solve it.

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