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Frequently Asked Questions

What is a realistic rate of return?

This depends on your investment strategy. A conservative portfolio might average 4-6%, while a more aggressive portfolio with higher exposure to equities (like the JSE All Share Index) could aim for 8-10% or more over the long term, but with higher risk.

Does this calculator include inflation?

No, this is a simplified calculator. To account for inflation, you should use a "real rate of return" (your expected return minus the inflation rate). For example, if you expect a 9% return and inflation is 5%, your real return is 4%.

What about tax on my retirement savings?

This calculator does not account for tax. In South Africa, contributions to approved retirement funds like a Retirement Annuity (RA) are often tax-deductible up to certain limits, allowing your investment to grow tax-free. Tax is then payable upon withdrawal at retirement.

Is 4 million rand enough to retire?

It depends entirely on your lifestyle. Using the 4% Rule, a R4 million portfolio would provide an annual income of roughly R160,000 (R13,333 per month before tax). For some, this is sufficient. For others, it may not cover all expenses like medical aid and housing. Use your personal monthly budget as the ultimate guide.

What is the 7% rule for retirement?

The 7% rule is a more aggressive withdrawal strategy compared to the standard 4% rule. It suggests withdrawing 7% of your portfolio's value each year. While this provides a higher income, it carries a significantly higher risk of depleting your capital too soon, especially if the market experiences a downturn early in your retirement.

How much money do I need to retire at 55 in South Africa?

There's no single number, as it's tied to your annual expenses. The key challenge with retiring at 55 is that your savings need to last much longer (potentially 35+ years). A common method is to multiply your desired annual income by 25 (the 4% rule). For example, if you need R40,000 per month (R480,000 per year), you'd need a target of approximately R12 million.

What is the 3 rule in a retirement calculator?

While there isn't a standard "3 Rule," this might refer to the "Rule of 300." This is another way of expressing the 4% rule: simply take your desired monthly retirement income and multiply it by 300 to get a quick estimate of the total capital you need. For example, R30,000 per month x 300 = R9 million target.