South Africans have saved, on average, only R1.8m to buy a pension at retirement, but expect to receive R12,000 a month as a pension income, but the reality is that their capital is 22% short of the amount they need to achieve their goal at current annuity rates. If these retirees want to invest their nest egg into a living annuity instead of a traditional annuity, they need retirement savings of R3.6m. South Africans’ expectations of what their retirement income will be, based on current savings and returns, will not be realised, says Bjorn Ladewig, longevity actuary at specialist retirement income company, Just SA. “There is a major gap between expectation and reality.” On average, respondents in “Just Retirement Insights”, an independent survey commissioned by Just SA, expect a monthly income in retirement of almost R12,000. This implies an expected annual income rate of 8%, based on their average retirement savings of R1.8m.

However, in current market conditions this expec...

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