South Africa, with one of the worst savings rates in the world at 14.5 % of gross domestic product (GDP) in Sep 2019, it is no surprise that National Treasury calculates that only about 6% of South Africans are on track to retire comfortably.
When you retire, daily expenses remain and grow with yearly inflation and economic turmoil. Many make the mistake their lifestyle spending decreases. The aim of most retirees should be to receive about 75% a year of their final annual salary when they retire.
Out of 15 million economically active South Africans, 67% have no retirement plan. The rule of thumb is that you should consistently save between 15% and 20% of your monthly salary while you are aged 20 to 60 to retire comfortably.
Now imagine reaching your retirement age without having saved adequately and ending up on a state pension (old age grant) of R1,860 per month. From this amount, groceries, electricity, utilities and other expenses need to be paid.