A Fin24 user wants to know how much he needs to retire comfortably. He writes:
I am a 53-year-old male.
How much money do I need to be able to retire securely?
Danelle Esterhuizen, legal specialist for Sanlam Senior Market Advice, responds:
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 to earn a living; 47% of people who reach retirement age depend on family members or friends to support them financially; and only 6 out of 100 South Africans can retire independently of others.
Back to your question: the average person requires roughly 65% to 75% of his/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 who can take your personal circumstances into consideration.
The reason you need good advice when saving for retirement (or just saving in general) is that there is a multitude of retirement products available in the market. Some of these will fit your personal circumstances and preferences better than others.
By getting the right financial advice you can avoid paying too much tax, while ensuring that your funds are liquid. In other words, you can access your money when you need to without any penalty or restriction.
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