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Saving for a comfortable retirement in SA - How much is enough?

Staff Writer
Estimated reading time: < 1 minute

Planning for retirement in South Africa involves several factors, including your desired retirement age, lifestyle expectations, and life expectancy.

Here’s a general guideline to help you estimate how much you need to save for retirement:

This includes housing, food, healthcare, transportation, entertainment, and other personal expenses. A common approach is to assume you’ll need about 70-80% of your pre-retirement income annually.

Calculate your retirement savings goal: Use the following formula to estimate your total retirement savings goal:

For example, if your annual living expenses are R300,000 and you expect to live for 25 years in retirement, you’ll need: R300,000 × 25=R7.5 million.

Consider other income sources: Include other sources of retirement income, such as a pension, annuities, or investments.

Factor in investment returns: Assume a conservative annual return on your investments. A common estimate is around 4-6% after inflation.

Adjust for any shortfall: If your current savings and projected returns fall short of your retirement goal, adjust your savings rate, retirement age, or expected retirement lifestyle.

Sanlam advises that retirees should plan to have 75% of your current pre-tax income.

According to Fidelity Investments, the general rule in 2023 is to save ten times your annual income by the time you retire at age 65 to maintain your current lifestyle.

Here are Fidelity Investments’ recommended savings milestones:

By age 30: Save the equivalent of your annual salary. For example, if you earn R240,000 per year, you should have R240,000 saved.

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