My clients are wealthy individuals – many of whom are close to retirement or already retired. Unlike the vast majority of South Africans, these are people who have enough money to retire well. By retiring well, I mean really well. They don’t have financial worries about their future. They can do the things they want to do like travel, visit their children overseas and pursue interesting hobbies. They can afford to enjoy their lives and still have money left over. Interestingly, most of them did not inherit anything of value, nor were they high-powered executives or financial gurus.So what’s their secret?

Over the years, I have developed a picture of what it took these people to get where they are. And based on this picture, I’ve developed my top five tips to retiring well:

1. Develop your human capital

Human capital is your own earnings power. Its the capital locked up in your intelligence, resourcefulness, creativity and tenacity. It is your biggest source of retirement capital. In the previous generation, many people built up wealth because they entered a profession –became doctors or auditors, worked hard and the end-result was a happy retirement. In our time, we associate building wealth with entrepreneurship. Think Steve Jobs! In the future, it may lie in something completely different. Entrepreneurship is not for everyone but make the best of what you have and who you are. The key is to keep developing yourself, keep learning and believe in yourself.

1. Live within your means

I know, it seems like such a boring one but please keep reading. The generation retiring well were children of the war and the Great Depression – they knew about hard times and they knew how to live frugally. You may have memories of a gran who saved all the wrapping paper or who could feed a crowd with one chicken. They did not believe in debt because it was frowned upon to owe anyone anything. They lived this way because they believed that you never knew when bad times could strike. They saved.

I know a man who has tracked his spending on a spreadsheet his entire working career. As a result, he can now choose how hard he wants to work, how many overseas holidays he can take his family on, plus he supports many needy people.

1. Make use of the tax breaks

You can now save almost a third of your taxable income tax-free in retirement products (T’s & C’s apply!). This makes a lot of sense – the government basically sponsors you to save. Unfortunately, retirement products have a bad name for many reasons, but don’t throw the baby out with the bath water. There are cost-efficient products that will deliver attractive returns. If you contribute to your employer’s retirement fund, make the highest possible contribution and if you are still some time way from retirement, select the most risky offer. The tax breaks and the regular contributions all contribute to a higher compounding, which is the secret ingredient with these products.

1. Use compounding to your advantage

When you’re young, you don’t need to save a lot towards retirement to make a huge difference. Why? You have time on your side. The years of compounding returns makes an exponential difference. It may not look like it when you are 30 or even 40 but by retirement it will have grown exponentially, ensuring a comfortable retirement. A contribution of 17% of your taxable income to a retirement product should replace your income in retirement.

1. Take risk

You won’t retire comfortably by just putting your savings in the bank. You need to take risk with your retirement capital. You need to invest your retirement capital predominantly in shares and property, locally and offshore. However, in order to do this safely, you need time on your side. These assets’ prices can be very volatile in the short term, which is why people shy away from them. In the long-term, they provide almost the only opportunities to beat inflation, which is your first hurdle.

You don’t have to know much about these investments, but when presented with the option for your retirement funds or any discretionary investment, choose the option with the biggest slice invested in these assets. Once you near retirement, this may not be the best option, so consult with an adviser.