How much you need to save in your 20s to retire comfortably in South Africa

South Africa faces a growing crisis in its national savings rate and retirement planning, and your twenties is a critical time to start saving.

A report from 10X Investments shows that only 6% of South Africans are ready to retire comfortably. This means most people don’t have a solid plan for retirement or think they haven’t saved enough money.

Many people struggle to save because of tough economic conditions. High unemployment, a lot of household debt, and the need to cover daily expenses make it hard to focus on long-term savings.

About 70% of people without a retirement plan say they simply don’t earn enough to save.

Deloitte’s South African Investment Management Outlook reports that the country’s national savings rate is just 0.5%, one of the lowest in the world.

In response to the financial strain faced by many citizens, the government introduced the “two-pot” pension system in September 2024.

This system allows individuals to access a portion of their retirement savings before reaching retirement age under specific conditions.

However, within just six weeks of its implementation, the South African Revenue Service (SARS) processed payouts totalling R21.4 billion.

As of January 2025, SARS had received over 2.6 million applications for tax directives related to these withdrawals, approving more than 2.4 million applications and disbursing a staggering R43.42 billion.

This rapid uptake highlights the dire financial circumstances many South Africans face, but it also poses significant risks to future financial security.

Rael Bloom, a product development actuary at Coronation, cautions against focusing solely on the immediate liquidity provided by the two-pot system.

He explained that withdrawing R1 from retirement savings at age 35 could result in a nominal cost of R30 by retirement due to the lost potential of compounded growth.

In real terms, this translates to a reduction of approximately R6 in retirement capital, illustrating the substantial long-term opportunity cost.

Another issue is that many people cash out their retirement savings when they change jobs. According to the 10X report, 56% of people do this, which weakens their financial security in the future.

Even among people who have saved for retirement, only 35% feel confident that their money will last through their retirement years.

How much you need to save

Starting early is key. Marnus Mostert, a franchise principal and financial adviser from Momentum, told BusinessTech that achieving a comfortable retirement generally requires replacing 75% of one’s current salary.

For someone beginning to save at age 25, this translates to allocating approximately 12% of their gross monthly income toward retirement savings to meet this goal by age 65.

For example, with a current gross salary of R40,000 and a target retirement income of R30,000 per month (adjusted for inflation), disciplined saving and investment are essential.

This scenario assumes a 10% annual investment growth rate and inflation-linked salary increases until retirement.

The tables below show how much you need to save in your 20s to retire comfortably in South Africa, as outlined by Mostert.

Robyn Laubscher from PSG Wealth told BusinessTech that retirement planning is important no matter how old you are. Your approach will change as you get older, but starting in your twenties gives you the biggest advantage.

Even small amounts of savings can grow a lot over time because of compound interest, which means you earn interest on both your savings and the interest it earns.

Laubscher suggests that young people should take advantage of employer retirement plans.

These plans often include extra contributions from the employer, which helps the savings grow faster.

It’s also important to learn good budgeting habits early. Spending wisely helps you save more and reach your financial goals.

Since young people have many years before retirement, it’s smart to invest in things that can grow a lot over time.

Getting advice from a financial expert can also help you choose the best savings plans and investments for your goals.

The journey to a secure retirement starts with making smart choices early, staying informed, and saving consistently.

While government policies and the economy play a role, your actions and planning are the most important factors in making sure you have enough money when you retire.