LISTEN: How much money do you need for retirement?
The current cost of living is making it harder for South Africans to plan for their futures.
With continuous petrol price increases, inflation, the power crisis, and so much more, it is difficult for the average South African to afford everything they need every month.
Naturally, this means that most people can't put away any kind of savings.
According to BusinessTech and a recent Baseline survey, 44% of South Africans said that they have not been actively saving and a third have no retirement plan.
It's hard to think about the future when you have to struggle today.
As the National Treasury, we are worried about the statistics for people who expect to rely on government pensions because, in the absence of growth, we do not want to end up with a society that relies on government handouts as opposed to saving money for their own future.
So how much do you need to save in order to retire comfortably?
Fidelity Investments says in 2023 that you need to save at least 10 times your annual salary if you are looking to retire at age 65 and maintain your current lifestyle.
This is then obviously adjusted according to the age you retire if you decide to do so earlier or later.
They also suggest specific milestones based on your age:
- Savings by age 30: The equivalent of your annual salary (e.g. R240,000)
- Savings by age 40: Three times your income (e.g. R720,000)
- Savings by age 50: Six times your income (e.g. R1.44 million)
- Savings by age 60: Eight times your income (e.g. R1.92 million)
- Savings by age 65: Ten times your income (e.g. R2.4 million)
Is this realistic or are most South Africans doomed to work until they absolutely no longer can?
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Main image courtesy of iStock/AJ Paulsen