Retiring in South Africa: here's how much you will need

For many South Africans, ensuring they have enough money when their working years come to an end is a top concern, though navigating the path to retirement savings remains challenging.

The Old Mutual Savings & Investment Monitor 2024 reports that saving for a comfortable retirement is a key financial goal for many working South Africans.

However, only one in four workers feels confident that they will have enough saved for retirement, with many struggling to balance debt repayment and essential living expenses.

Upon retirement, individuals typically require less income, as certain expenses—such as commuting, mortgage payments, and retirement contributions—are no longer necessary. Additionally, tax obligations decrease after 65, with further reductions after 75.

The exact amount needed for retirement varies based on personal factors like current savings, desired retirement age, and future income needs. However, experts from the 10X Investments Consultant Team suggest three “rules of thumb” for estimating adequate retirement savings:

For instance, if your monthly salary is R25,000 in your last working year, your annual salary would be R300,000. To maintain your lifestyle in retirement, you’d need at least 15 times your annual salary, which would be R4.5 million.

This guideline may require adjustment if you plan to travel or engage in expensive hobbies during retirement.

Another approach is to consider that you’ll need R1 million invested in an annuity for every R5,000 per month you want to receive as income in retirement.

For example, to draw R25,000 monthly, you would need R5 million saved by retirement.

This more conservative method suggests multiplying your anticipated monthly retirement income by 300. For example, if you expect to need R25,000 per month, you will need R7.5 million saved.