PASSIVE lump-sum investor

Tanya is 58 and is thinking through her options for her retirement. She has never married but has two grown children with her longtime partner. For the past seven years she has managed her own hair salon.

She is in talks to sell her salon as a going concern. It made a profit of R800,000 in each of the past three years, from which Tanya draws a salary and dividend.

She is in discussions with a potential purchaser to acquire the salon for R5m, which she considers to be her retirement nest egg. She expects to complete the sale of her salon before she turns 60.

Tanya has a retirement annuity (RA) which her adviser says should be worth R1.4m when she’s 65, but would be worth only R880,000 if she cashes in when she turns 60.

Over the past few years Tanya has been investing in the stock market and has built up a portfolio that is now worth R650,000, with R120,000 of that in a tax-free savings account. Because of her RA and salon, she has eschewed the relative safety of bonds and cash and focused mainly on dividendpaying stocks. She has been reinvesting the dividends, but on retirement she planned to use them for income.

With the recent hike in dividend withholding tax she’s concerned that she won’t be clearing as much as expected from the dividends and is not sure if she should change the portfolio’s focus.

She does not own any property and has no assets apart from her new car, which is paid off. If the sale of the salon goes through, she wants to live off her savings and hopes to be able to give some money to her children, both of whom have young children. But she does have the option of continuing to work at the salon and receiving a salary.

She wants advice on how to manage the proceeds from the sale and plan for her retirement, including whether she should continue working for a few more years.