Could you survive on less than a third of your income in retirement?

This article was originally published on 27 January 2022.

Despite taking steps to save, millions of South Africans are at risk of having to make significant lifestyle-related downgrades when they are no longer actively earning an income. The implementation of the two-pot retirement system aims to improve how much we preserve for our retirement, but there are other factors that we need to be mindful of for better outcomes. Twanji Kalula explains why proactively revisiting our financial plans annually can help us improve our financial scenarios at retirement.

Being able to retire comfortably is one of the most common goals when it comes to long-term financial planning. Most of us will reach a point in our lives where we are no longer generating a regular income to cover our living expenses and will need to draw one from our accumulated savings. Sadly, many investors face the realisation that they simply do not have the money to maintain the lifestyle they have become accustomed to, even though they took the right steps to save for retirement. Worse, this realisation often occurs when there isn’t enough time to do anything about it.

How much money do we need for a comfortable retirement?
One of the reasons we miss the mark is that we don’t really understand how much money we will actually need at retirement. Most personal finance experts suggest that you need to be able to replace at least 75% of your final income at retirement age to maintain a similar standard of living. This generally means that we should be saving anything from 12% to 17% of our income from the day we start working.

Read full article on: https://www.allangray.co.za/latest-insights/retirement/could-you-survive-on-less-than-a-third-of-your-income-in-retirement/

August 19 2024 By Twanji Kalula - Allan Gray