Nirdev Desai. Supplied
Investors who understand their role in the financial planning process are far more likely to achieve positive outcomes. This has most recently been highlighted by the Financial Independence, Retire Early movement with its extreme focus on living frugally and curbing expenses with the ultimate aim of retiring early. This approach encourages this behaviour but its extreme focus on frugal living may not be for everyone.

Your own vision of financial freedom might differ significantly to someone else's and, as with all financial plans, the right plan is one that is tailored to your needs. Your plan also needs to be revisited as your circumstances change.

Our framework for being able to accumulate savings has changed. Most of us are no longer work for one employer in our working lifetimes, and “taking some time off” (as a sabbatical or when considering your next move) is becoming more common. This flexibility allows us to lead more rewarding lives, but we need to understand the potential impact this may have on our ability to accumulate savings.

Preserving retirement savings when changing jobs is non-negotiable. If you take time off work, you will need to make it up elsewhere, either by saving more when you return to work, or by working for longer.

Improved health and longevity might mean you will be able to retire later. For every year you postpone retiring, you are not only not using your retirement savings to sustain you but you also have a chance to continue accumulating more savings. Working for as long as possible therefore makes sense. Yet despite this, the age at which people are retiring hasn't changed much over the past 100 years (still between 55 and 65).

According to a recent survey by Sanlam, if the average man reaches the age of 65, there is a 50 percent chance of him living to 85 and a 30 percent chance he will live to 91. Planning for the average outcome, however, may leave you falling far short of your actual needs.

Many mid- to higher-net-worth South Africans prefer to self-insure their retirement income in the form of living annuities, but if you choose to do so, you need to ensure that your income withdrawal level is sustainable. This means that you need to understand the impact that your drawdown rate is likely to have on the longevity of your capital. A qualified financial adviser can help you understand what this means for your specific circumstances.

Just because the South African equity market has been flat for the last five years does not mean that you should give up on equities (and their potential long-term growth). Make sure your capital is invested to offer you an appropriate balance between growth assets and more conservative investments such as cash.

If you are making your own investment decisions, invest time to ensure you are positioned to manage your own money effectively. Research has shown that it is typically investor behaviour, not the markets, that let investors down.

The value of good financial advice lies far beyond selecting a product or fund. It lies in providing perspective on the challenges you face and in helping to temper the emotional reactions that destroy value.

Nirdev Desai is head of sales at PSG Wealth.

PERSONAL FINANCE