THE money TIP
It’s important to know how much money you need in retirement in order to retire well. You’d think that savers would know this, but according to National Treasury, only 6% of South Africans will have enough money to retire comfortably.
This sobering statistic reveals how, all too often, South African savers miss the mark when it comes to their pension.
“The reality is that saving is hard for many South Africans at the moment.
“Consumers are juggling debt, rising food expenses, education and other costs,” says Jeanette Marais, director of distribution and client service at Allan Gray.
Marais says a capital sum of 17 times your final annual pretax salary will give you an income equal to about 75% of your salary at retirement age.
To find out if you are on track you can calculate it in the following way: after working for 10 years, you should have saved up double your annual salary; after 20 years, five times your annual salary; and after 30 years, 10 times your annual salary.
“This will bring you to the number of 17 times your annual salary after investing for 40 years,” Marais says.