Discovery’s New Retirement Plan Tackles South Africa’s Longevity and Healthcare Cost Crisis

Outliving your savings is becoming the new retirement reality

South Africans are living longer than ever before, but our money isn’t keeping up. According to global research, most retirees run out of savings a full decade before the end of their lives. For women, the gap is even starker at 13 years. Add to that the rising price tag of healthcare, and the golden years are looking more like a financial minefield.

Discovery Invest thinks it has found a solution. The company has launched the Lifespan Linked Income Plan, a retirement product designed to help South Africans stretch their savings, maintain flexibility, and still guarantee income in the later years when health and care costs surge.

“Retirement planning hasn’t kept pace with reality,” said Kenny Rabson, CEO of Discovery Invest. “If you plan to age 80 but live to 90, you’d need to cut your annual income by nearly half. That’s simply not sustainable.”

Why longevity is both a blessing and a burden

On the one hand, longer life expectancy is something to celebrate, more years with family, more time to enjoy retirement. But Discovery’s own data shows more than 60% of retirees outlive their actuarial life expectancy, meaning they burn through their pensions sooner than expected.

Worse, the average retiree spends more than a decade in poor health, facing out-of-pocket medical costs up to three times higher than when they were younger. For South Africa, where public healthcare systems are already under pressure, this is more than a personal problem, it’s a systemic risk.

Understanding the three phases of retirement

Discovery breaks retirement down into three distinct phases:

• 55–70: The active years. Retirees are healthier, travelling, and enjoying discretionary spending.

• 70–80: The steady years. Expenses stabilise, with less leisure spending but steady household and medical costs.

• 80+: The supported years. Health challenges kick in, often requiring costly care and support.

This is where traditional products often fall short. Living annuities give flexibility but risk early depletion, while fixed annuities guarantee income but lock retirees into rigid terms that may not match their changing needs.

Discovery’s different angle

The Lifespan Linked Income Plan is built as a hybrid with a twist. Instead of tying up large sums in fixed annuities too early, retirees can remain invested and flexible in the early years. A deferred guarantee then kicks in from age 80, ensuring income when it matters most.

In other words, the plan mirrors the natural rhythm of retirement, more flexibility when you’re active, more certainty when health concerns grow.

Health and wealth: tied together

Staying true to Discovery’s “shared value” model, the product also rewards healthier living and disciplined withdrawals. Retirees who hit health and savings goals can boost their income by as much as 50%.

Discovery claims it’s already seen an 11% reduction in withdrawal rates since rolling out its incentive-driven approach, translating into stronger long-term outcomes. Healthy retirees are seeing income uplifts ranging from 17% to 46%, with projections suggesting retirement funds could be 30% higher if the habits stick.

What this means for South Africans

For a country where too many retirees already depend on adult children, extended families, or state pensions, Discovery’s new product reflects a broader shift: retirement planning is no longer just about saving, it’s about surviving the financial realities of longevity.

On social media, early reactions have been a mix of curiosity and scepticism. Some applaud Discovery for innovating around a very real problem. Others question whether such products are accessible to average South Africans, or whether they remain tailored to the wealthier market.

Still, the core message is hard to ignore: living longer is expensive, and without careful planning, even the best pensions can fall short.

{Source: Moneyweb}

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