How Much must you Save?
How much must you save every month or year if you want to
One number that is easy to understand is to express your retirement savings as a multiple of your current salary at different points in your working life.
The multiple of your salary that you should have saved is based on the following assumptions:
Based on these assumptions and that you should have saved 15 times your final salary by the time you retire, TABLE 1 sets out some goalposts on your road to retirement.
Currently, for each R1 million that a 65-year-old member has saved;
So, if you want to invest in an inflation-linked annuity at the age of 65, you will need to have saved 15 times your final salary by 63 to buy an annuity that will replace your salary.
TABLE 2 sets out the percentage of your salary that you should save if you start saving at different stages of your life.
As the table shows, if you haven’t started saving at age 25, saving 15% of your salary will not enable you to achieve a multiple of 15 times your final salary at retirement.
Late starters have to save much more every month.
PLEASE NOTE: Cashing in your retirement savings each time you change employment means you have to save more each month to catch up.
Where are you positioned on the above table?