Knowing the best way to save for your retirement without placing a strain on your finances is possible. Here is what you need to know.

Do you have enough to sustain your lifestyle? 

Being prepared for unexpected moments such as becoming unemployed, being faced with a disability that prevents you from working or even planning for retirement will expose how prepared we are for such moments. A general rule of thumb is to have 6 months' worth of finances to cover your needs should you be faced with the unexpected. But what about retirement. When it comes to financial planning for your retirement, it is important to look at your current lifestyle. Do you have enough saved to sustain this lifestyle should you retire? 

You will need at least 75% of your final salary

Whether the goal is to retire at 35 years old or 65 years old, the best time to start planning for your retirement is now. If you have already started looking into ways you can comfortably retire in South Africa, you will come across a general rule of thumb that states that you need to have at least 75% of your final salary saved. Remember that what you retire on will be what sustains you when you no longer have a means of earning an income. It will help you pay for your house, car, medical bills, living expenses and more. Therefore, choose a retirement plan that will consider these factors.

Keep inflation in mind 

There are many ways you can go about investing towards your retirement. You can have a retirement annuity plan, life cover, or even invest in stocks. However, one thing to keep in mind for whichever route you take is to consider if it will keep up with the inflation rate. Your lifestyle will improve as you age. Therefore, keeping your savings in line with these lifestyle adjustments can leave you better prepared.

Saving by age

To avoid being overwhelmed when planning for your retirement, knowing what you need to save for each age-related milestone can make it manageable. For example: 

• 25 years old (an average of 17% of your salary) 
• 30 years old (an average of 22% of your salary) 
• 40 years old (an average of 42% of your salary) 
• 45 years old (an average of 59% of your salary) 

Your needs are different  

Retirement looks different from one person to the next. Therefore, finding what works for you boils down to speaking to a financial advisor or planner to help you navigate a suitable amount you can contribute towards retiring comfortably. Keep in mind what type of lifestyle you would like to be living when you have retired. It is always better to save more than to end up having less for you to live on.