Retirement Calculator
The underlying principle of a pension fund is to save part of your salary while working to ensure that you have something to replace your monthly income when you do not earn a salary anymore.
Normally you will save on some expenses such as transport to work. It is also a good idea to plan for settlement of the bond on your home before retirement. You must further keep in mind that most of your fringe benefits attached to your salary package also fall away, i.e. no more transport allowance, no more annual bonus, no more housing allowance, in some cases no more medical aid assistance, etc. Income Tax however is still payable.
A very important principle of retirement savings is that the earlier you start saving for retirement the better your chances of providing for your old age.
The question is: How much pension is enough?
A rule of thumb in the pension industry is 75% of your basic salary at retirement.
Do keep in mind that it is only a projection and not a commitment from the Fund. You must also consider other retirement savings that you have such as annuities at an insurance company.
We developed a Retirement Calculator to give you an idea of how much you will need.
You have a few options to increase your savings should it be necessary such as:
- Increase your monthly contribution. You may choose 7%, 8%, 9% or 10% once a year.
- Deposit any extra cash you have into the Fund. This is called an Additional Voluntary Contribution (AVC) and can be done any time.
- Buy additional annuities at an insurance company.