HOW MUCH DO YOU NEED TO RETIRE?
A READER wants to know how much he needs to retire comfortably. He wrote:
I am a 53-year-old man. How much money do I need to be able to retire securely? Danelle Esterhuizen, legal specialist for Sanlam senior market advice, responded:
It is extremely difficult to answer a question like this with insufficient information. The starting point would be for a financial adviser to prepare a proper needs analysis with your personal information.
The reality in South Africa is that 16% of retired people are fully dependent on state pensions, 31% of people who reach retirement age have to keep on working, 47% of people who reach retirement age depend on family or friends for support, and only six out of 100 can retire independently of others.
Back to your question: the average person requires roughly 65% to 75% of his or her last salary to live comfortably after retirement. If you still have outstanding debt and expect higher medical expenses, you might need to increase this figure. If you want to preserve your capital, it also influences the calculation.
A rough rule of thumb is that you need 15 times your current annual salary to retire on (if you retire at 65), but it is of the utmost importance that you obtain advice from a qualified financial adviser.
The reason you need good advice when saving for retirement is that there are many retirement products on the market. Some of them will suit you better than others. By getting the right advice you can avoid paying too much tax, while ensuring your funds are liquid. In other words, you can access your money when you need to without restriction. — Fin24. • Disclaimer: Fin24 and Weekend Witness cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.