Retirement: Am I Saving Enough?

Maybe you have a pension fund at work and assume it will be enough. Or maybe you cashed out a fund when you changed jobs and now you are worried. Retirement planning is not only for the wealthy, and it is never too early or too late to check where you stand.

What is happening

A common guide is that you will need about 75% of your final salary each month to keep a similar lifestyle after you stop working. To get there, many planners suggest saving around 15% of your salary for most of your working life, starting in your twenties. Start later and you will need to save more, work longer, or plan to live on less.

In South Africa, most formal workers save through an employer pension or provident fund. Others use a retirement annuity (RA). Contributions to these funds get tax relief, within an annual limit. The two-pot system, which started in September 2024, lets you access a small part of your savings each year, but the rest is kept for retirement.

The biggest threat to retirement savings is cashing out when you change jobs. Always consider preserving your savings in a preservation fund or your new employer's fund. The second threat is starting late. The third is not knowing what you have.

The SASSA Older Person's Grant helps from age 60 if you qualify under the means test, but it is a safety net, not a plan. Many people also support family members in retirement, so include that in your thinking.

Signs to notice

• You do not know how much is in your retirement fund.
• You cashed out a fund when you changed jobs.
• You are over 40 and have no retirement savings.
• You plan to rely on your children or the state.
• You are self-employed with no retirement annuity.

30-second self-check

Answer yes or no.

• Do you know the current value of your retirement savings?
• Do you and your employer together save at least 15% of your salary for retirement?
• Have you kept all your retirement savings when changing jobs?
• Have you checked your latest benefit statement in the last year?
• Do you know roughly how much you will need each month in retirement?
• Do you have a plan for medical costs after retirement?

0-1 yes: You may be behind. The sooner you act, the more time your money has to grow. Start by finding out what you have.
2-3 yes: You are partly on track. Increase your contributions where you can and check your projection.
4 or more yes: You seem to be on a good path. Keep checking your projection every year.

What you can do next

• Today: Find your latest benefit statement or log in to your fund's website to see your current value.
• This week: Use the calculator to check your projected income in retirement against what you will need.
• This month: If there is a gap, look at increasing contributions, even by 1% or 2%, or starting a retirement annuity. Ask an FSCA-authorised planner for help.
• If you are changing jobs, preserve your savings rather than cashing out.

Your tool

Retirement Readiness Score - enter your age, salary, savings and contribution rate to see a projected retirement income, a readiness score and the extra you may need to save each month.

When to get professional help

Speak to an FSCA-authorised financial planner if you are behind, near retirement, or deciding what to do with your savings when you leave a job. Worry about old age can be heavy, especially if you support others, and it helps to talk about it.
Who can help: FSCA-authorised financial planner, money coach, tax practitioner

Getting help in South Africa

Your fund's administrator and your HR department can give you your benefit statement. The Pension Funds Adjudicator (pfa.org.za) handles complaints about pension and provident funds. The Financial Sector Conduct Authority (fsca.co.za) regulates retirement funds and lets you check adviser authorisation. SASSA (sassa.gov.za) explains the Older Person's Grant. SARS (sars.gov.za) explains tax on retirement savings.