Working out how much is Just Enough to save for retirement is sometimes not a priority when simply making ends meet is a struggle. But realistic retirement planning is important if we want our retirement income to match what we expect it will be.
“South Africans are underestimating the proportion of their retirement income they will need to allocate to basic living expenses and the amount of money they will need for discretionary income. In fact, we found in the latest Just Retirement Insights that there is a major gap between expectation and reality,” says Bjorn Ladewig, longevity actuary at Just.
According to Just Retirement Insights – independent research commissioned by Just – South Africans’ expectations of what their retirement income will be, based on current savings and returns, will not be realised. 

On average, respondents expect a monthly income in retirement of almost R12 000. This implies an expected annual income rate of 8%, based on their average retirement savings of R1,8 million. However, in current market conditions this expectation is not achievable – guaranteed lifetime income that targets inflationary increases provides an annual annuity income rate of approximately 6,5% for a couple where the male is aged 65 and his female spouse is aged 61.
This means that, to achieve the expected level of income, 22% more needs to be saved to reach R2,2 million. Even worse, if the expected level of income is to be achieved through a living annuity, a retirement saving of R3,6 million is required. 

This figure is based on the draft maximum sustainable income rate recommended by the Financial Sector Conduct Authority for living annuities for a similar couple, which is only 4%, compared to the 6,5% above.