Brett Mackay, Senior Investment Consultant at 10X
Most people don’t get retirement planning wrong because they are careless with money. They get it wrong because the goal feels distant, abstract and easy to underestimate. As a result, they rely on instinct instead of structure and that gap becomes costly over time. Retirement is not a cheaper version of life, it is the same life without a salary. From housing and healthcare to family support and daily living costs, everything still needs to be funded just without active income to rely on.
The encouraging part is that becoming a retirement millionaire is not impossible. It usually comes down to a few habits repeated over many years: starting early, increasing contributions when your income grows, maximising employer contributions, adding extra savings where possible, avoiding unnecessary withdrawals, keeping fees low and giving your money enough time to compound.
A useful starting point is that you may need around 15 times your final annual salary saved by the time you retire. If you want more breathing room, the freedom to travel, to cover rising medical costs, or to help family when needed, a safer target may be closer to 17 to 20 times your final annual salary.
Another way to think about it, as a rough rule of thumb, is to multiply the monthly income you want in retirement by 300. If you want R25,000 a month, you need roughly R7.5 million saved. Those figures are in today’s money. South Africa’s long-term inflation rate has averaged between 3-6%, and even at a 4% average inflation rate, R25,000 a month in today’s terms becomes roughly R55,000 a month in 20 years’ time.
Time is the real advantage
The most powerful advantage young savers have is time. In other words, the earlier you start, the longer your money has to grow, and the less pressure there is to make up for lost years later. For example, if you start saving at age 25 and contribute around R2,194 a month for 40 years, you could contribute about R1.22 million in total. Assuming annual growth of 5% after fees, that could grow to roughly R3 million by retirement. These projections are illustrative, based on stated assumptions, and actual returns may differ as investment growth is not guaranteed.
The important point is not only the final number, but rather the difference between what was contributed and what the investment became. That gap is the effect of compounding over time.
This is why retirement planning is often less about one big financial decision and more about small, consistent decisions made early enough. Someone who starts early can also use salary increases to lift their contributions gradually. Instead of absorbing every raise into lifestyle spending, part of each increase can be directed into a pension, provident fund, retirement annuity, or other long-term savings.
Similarly, if you are 40 and already have R1 million in retirement savings, you are in an incredibly strong position. Assuming annual growth of 5% after fees, that R1 million left invested for 25 years could grow to more than R3 million by age 65, even without further contributions. The calculation is straightforward: R1 million growing by 5% a year for 25 years becomes roughly R3.4 million, which means about R2.4 million of the final amount comes from investment growth rather than new savings.
That shows the power of time in the market, but it also shows why R1 million should be seen as a foundation, not an end point. The calculation does not account for inflation, tax, changes in investment returns or future medical and lifestyle costs. R3.4 million in 25 years’ time will therefore not have the same buying power as R3.4 million today.
Retirement savings should usually be properly diversified across asset classes, geographies and risk levels, depending on your age, goals and risk profile. A younger saver may be able to take on more growth assets because they have more time to ride out market volatility, while someone closer to retirement may need a more balanced approach.
Use what is already available to you
One of the simplest ways to build retirement wealth is to make full use of employer contributions where they are available. Many employees do not know the maximum contribution their employer allows, or whether they are contributing enough to get the full benefit.
If your employer matches contributions up to a certain level, not using that benefit is effectively leaving part of your remuneration on the table. A good first step is to ask your employer or HR department what the maximum contribution structure allows, and then aim to contribute enough each month to receive the full employer benefit.
Where it is financially possible, additional savings through a Retirement Annuity or voluntary contributions can make a meaningful difference over time, especially for people who are self-employed or want to top up an existing workplace fund.
Do not undo your progress
Most South Africans are nowhere near prepared for retirement. According to the latest 10X Retirement Reality Report, only 6% of South Africans are on track to retire comfortably.
One major problem has been cashing out retirement savings when changing jobs. The 10X report found that 56% of people who changed jobs admitted to doing exactly that, and National Treasury previously estimated that this was costing the retirement system around R78 billion a year.
The Two-Pot system, which came into effect on 1 September 2024, preserves two-thirds of new contributions until retirement while allowing limited access to a Savings Component once a year. That access can help in an emergency, but it should not become an annual bonus because every withdrawal is taxed and removed from your investment.
Becoming a retirement millionaire is about giving your money time to grow: start early, increase contributions when your salary grows, maximise employer contributions, consider a Retirement Annuity, make voluntary contributions when you can, keep fees low, avoid unnecessary withdrawals and stay invested. The earlier you make these choices well, the harder your money works for you.
ENDS
