How should I save for retirement?

After financially navigating the pandemic, I’m concerned that

I’m not saving enough for my retirement. How much should I be saving?

Name withheld

Schalk Louw, a wealth manager

at PSG Wealth, responds: Some say that you should use 80% of your current spending as the benchmark for what you’ll need to cover your monthly expenses once retired. Let’s use this as a starting point. We’ll work on a basic monthly income of R15 000. By applying the

80% rule, you will need at least R12 000 a month after retirement in order to maintain your current standard of living.

We also need to factor in a safe withdrawal rate, which allows you to withdraw 5% of your portfolio yearly in order to ensure that you don’t outlive your savings, as well as account for inflation. If you don’t properly compensate for inflation, you may fall short of your required total after retirement.

It’s also important for you to take into account any possible variables that may affect you, such as declining health or the possibility that you may still have to cover mortgage bond payments after retirement.

Knowledge is power when it comes to saving. With the help of a tool such as a retirement calculator, you can work out how much you will need to save each month in order to reach your retirement total, which is a great starting point for your savings journey.

If you are already saving towards your retirement by contributing the maximum towards a retirement annuity or pension fund, you already have a good head start.