Last Updated on 25/09/2025 by Carl-Peter Lehmann
Retirement Income Planning for Entrepreneurs Case Study: David and Elaine are seasoned entrepreneurs who spent over 30 years building a successful niche consulting business. Without access to formal employer retirement schemes, they deliberately built their wealth across a mix of retirement annuities and offshore assets. As they approached retirement, they sought help to simplify their affairs, ensure sustainable income, and protect their estate from unnecessary erosion.
Despite having a substantial portfolio, the absence of pension fund defaults, their global investment footprint, and nuanced income planning made this a slightly complex engagement — ideal for a tailored, flat-fee advice model that aligns cost with service, not asset size.
Clients: David and Elaine
Age: Mid-60s
Profession (Pre-Retirement): Owners of a boutique consulting firm
Total Investment Balance Sheet: ~R30 million
Annual Flat Fee: R60,000 p.a.
Financial Snapshot
| Asset Type | Value (approx.) | Location |
|---|---|---|
| Retirement Annuities (combined) | R15 million | South Africa |
| Offshore Portfolio (USD 850K) | R15 million (ZAR equivalent) | Global (International custodian) |
| Total Balance Sheet | ~R30 million |
Income Needs and Drawdown Strategy
David and Elaine require a net monthly income of ~R75,000 (R900,000 p.a.). Their income plan was designed to deliver:
1. Guaranteed income to cover essential expenses
2. Investment-linked flexibility for discretionary spending
3. Global diversification and rand-hedged capital preservation
| Income Source | Capital Allocated | Annual Income (Start) | Details |
|---|---|---|---|
| Life Annuity (Elaine from her RA) | R5 million | ~R375,000 | 7.5% starting income, 6% escalation, 75% continuation to David |
| Living Annuity (David from his RA) | R10 million | ~R400,000 (4% p.a.) | Investment return mandate: CPI + 4%. Diversified strategy with active/passive, hedge funds |
| Offshore Portfolio (Joint) | (USD 850K) R15 million equiv. | ~R300,000–R400,000 | Opportunistic harvesting (2–3% p.a.), CGT-managed, USD-denominated |
| Total Projected Gross Income | ~R1.075m p.a. | Allows for lifestyle escalation, currency flexibility, and reinvestment when not drawn |
Key Retirement Planning Income Decisions We Guided
1. Life Annuity for Certainty (Elaine)
Elaine’s R5 million RA was used to purchase a life annuity offering:
- 7.5% starting income
- 6% guaranteed annual increase
- 75% reversion to David on her death
This forms the guaranteed income floor — rising over time and unaffected by markets.
2. Living Annuity with Flexible Mandate (David)
David’s R10 million RA was converted into a living annuity invested to achieve inflation + 4%.
The underlying strategy:
- Blend of active and passive funds
- Mix of boutique and brand-name managers
- Exposure to hedge funds and alternative strategies to reduce volatility
- Initial drawdown is 4% p.a., with scope to adjust in line with market and personal needs.
3. Offshore Portfolio Structuring
The offshore portfolio (USD 850K / R15 million) is:
- Jointly held via an international custodian platform
- Invested in accumulation-only ETFs and funds
- Targeting USD inflation + 3-4% p.a. (~6-7% nominal), with 60% equity exposure
The structure mitigates:
- Situs tax issues
- The need to report foreign dividend income
- Currency flexibility and opportunistic harvesting (2–3% p.a.) allow top-up income via CGT, not income tax — supporting long-term double-digit ZAR returns (assuming continued long-term Rand depreciation) without excess risk.
Retirement Income Plan Investment Portfolio Composition
| Portfolio | Holdings/Strategy |
|---|---|
| Life Annuity | Guaranteed by insurer, rising income for life with spouse continuation |
| Living Annuity | Inflation+4% portfolio: diversified blend with hedge funds, equity, and multi-asset |
| Offshore Portfolio | Global ETFs/funds in USD, 60% equity, structured for tax and estate efficiency |
Henceforward's Role and Flat-Fee Justification
We serve David and Elaine on a flat fee of R60,000 p.a., justified by the complexity (offshore assets do add complexity relative to ZAR only portfolios) and breadth of services required:
| Area | Details |
|---|---|
| Retirement Income Planning | Hybrid annuity structure, inflation modelling, long-term drawdown strategy |
| Investment Oversight | Risk/return strategy across platforms, performance reviews, rebalancing |
| Tax Structuring | CGT optimization, income vs. capital top-ups, wrapper vs. direct holding |
| Global Estate Planning | Joint holdings, worldwide will updates, currency-executor simplification |
| Review and Governance | Dynamic reviews (bi-annual), income resets, opportunistic harvesting plans |
Further Reading: Understanding Henceforward’s Flat-Fee Advice Philosophy and Why it Works
Henceforward Flat-Fee vs % of AUM Comparison
| Fee Model | Amount (Annual) | Notes |
|---|---|---|
| % of AUM (0.5% standard) | R150,000 | Based on R30 million |
| Henceforward Flat Fee | R60,000 | Transparent, outcome-based, less than half the industry average |
| Annual Savings | R90,000+ | Reinvestable or used for family/lifestyle purposes |
Real value for clients
✅ Built a rising, guaranteed income floor with long-term escalation
✅ Delivered global integration across asset classes, currencies, and estate planning
✅ Enabled lifestyle drawdowns using capital gains, not income tax
✅ Structured for rand-hedging without high-risk exposure
✅ Coordinated reviews across platforms, providers, and legal structures
Now Read: Jan’s retiree case study and why with a similar size balance sheet his fee is only R36,000 p.a.
Final Thoughts on Retirement Planning Income Case Study for entrepreneurs
While David and Elaine’s asset base is substantial, the real work began with understanding their lifestyle needs and modelling various scenarios to ensure they could live a fulfilling and comfortable retirement — doing the things they love, without financial stress. From there, we built a robust, tailored, and tax-efficient strategy to support those goals. The complexity lay not only in the absence of default retirement structures, but in the integration required across multiple platforms — living annuities, life annuities, offshore custodians, and estate plans. This isn’t the kind of situation that lends itself to templated advice or product-linked commissions. It requires holistic, high-touch financial planning anchored in the clients’ real-life goals.
At Henceforward, our flat-fee model aligns our work with your goals — not your account balances — ensuring we remain focused on outcomes, clarity, and value.
Carl-Peter Lehmann, CFP®
Carl-Peter is a CERTIFIED FINANCIAL PLANNER® and director at Henceforward, with over two decades of experience designing integrated, global retirement strategies. His expertise includes retirement income planning, tax efficiency, offshore investing, and legacy structuring — all under a transparent flat-fee model.
