When to start saving for retirement

If you’re starting your first job the last thing you want to be thinking about is saving for your retirement which could be 40 or 50 years from now. The thing is, it’s the perfect time to start. The more time you have on your side, the more opportunity your money has to work and grow for you. So, the best time to start saving for your retirement is when you land your first permanent job. The second best time to start is now.

Saving for your retirement is an important decision. There are various retirement plans you can choose from. In addition, in South Africa retirement annuity and pension fund contributions are tax deductible up to certain limits.

How to save 1 million
by age 65*

Age Monthly premiums Total invested Growth in your investment
25 R 178.74 R 85 796.91 R 915 000
35 R 480.93 R 173 134.80 R 826 864
45 R 1 381.24 R 331 497.79 R 668 502
55 R 4 963.82 R 595 658.84 R 404 341
60 R 12 958.11 R 777 486.68 R 222 513

*The purpose of this table is to illustrate the cost of delaying saving for your retirement. Starting early means having to invest less on a monthly basis and enjoying more investment growth. The example above assumes a 10% interest rate. The amount that you need to save will differ from the example. Try our Retirement Calculator to find out how much you need to save for your retirement.

Why save for retirement?

Expect to live longer

With the current advances (not to mention future ones) in technology and medicine you can expect to live longer.

That means you’ll need to make provision for an additional 20 - 25 years if you are planning to retire at age 65. On the upside you should be debt-free i.e. you don’t have to worry about car or bond repayments and university fees. On the downside you do need to take care of your health. With ageing comes many unwanted ailments. Having enough medical cover to keep you comfortable is essential in South Africa. Now imagine reaching your retirement age without having saved adequately and ending up on a state pension of R1780 per month. From this amount, groceries, electricity, utilities and other expenses need to be paid.

... imagine reaching your retirement age without having saved adequately and ending up on a state pension of R1780-R1800 per month.

How to save for retirement

You need inflation-beating investments

Most times cash is king but not when it comes to investing for your retirement. You want your money to grow at an inflation-beating rate (because inflation is your investment's number one enemy). That means investing it in a retirement annuity so that you can benefit from compound interest and growth. Combine that with time (the number of years until you retire) and you have a winning combination. The more time your money has to grow the more you should have when you’re ready to say goodbye to your job.


If you invested R 500 per month for the past 20 years:

At the
rate of inflation (5.66%)

you would have:

R219 283
In the Old Mutual Investors' Fund
(30.09.1999 - 30.09.2019)

you would have:

R461 598

How much do I need to save for retirement?

How much is enough for retirement in South Africa? The million Rand question, or in most cases quite a few million. Most experts put the number at between 70 -80% of your current income. So, if you’re earning R40 000 per month then you’ll need between R28 000 to R32 000 per month when you retire.

To get a clear indication of how much you need to save, try our Retirement Funding Calculator.


Actuarial models show that a good rule of thumb is that 12 times your annual salary is likely to buy you a financially comfortable retirement.

*Peter Doyle, former president of the Actuarial Society of South Africa

Covering all your bases

The primary and most tax efficient way to invest for your retirement is to participate (by investing the maximum percentage of your salary that you can) in your company’s pension scheme and/or invest in a Retirement Annuity.

Other ways of supplementing your retirement savings - once you contribute your allowable 27,5% of your gross remuneration (limited to R350 000) to a pension fund or RA  - is by investing in tax free savings accounts, a second property or a share portfolio.

Why Old Mutual?


Old Mutual is over 170 years old which means we’re able to offer you expertise gathered over the years to structure a retirement solution that’s right for you.


We offer you solid, steady returns to help you meet your retirement goals.


Our fund managers (they're the ones that invest your money) invest their own money in the funds they manage. Now that’s commitment for you.

Old Mutual Retirement Plans

Saving for your retirement is an important decision. There are various retirement policies you can choose from. All retirement annuity contributions are tax deductible and you can access your portfolio 24/7 via our secure online environment. Compare the types of retirement funds and benefits available.

Unit Trusts
Retirement Annuity
MAX Investments
Retirement Annuity Flexible Investment
Optimal Plan
Minimums R500/month R500/month R350/month Lump sum of R50 000
Is your retirement annuity contribution tax deductible?
Can you view your portfolio 24/7 via a secure online environment?
Can you invest in one or more Old Mutual funds?
Enjoy investment boosters the longer you invest
5% extra added to your investment upfront

Other Products

  • Savings 4 Retirement is a long term endowment (savings plan) that helps to add to your retirement savings. The minimum premium is R250 per month with a minimum investment term of 15 years. This policy pays out at your normal retirement age.
  • Flexipension is no longer open for new investments. Flexipension customers can view their regular reports here.

Are you getting closer to retirement?

As you get closer to retirement you'll need to start thinking about what type of income annuity (the product responsible for paying you a monthly "salary" in your retirement) you would like to invest in. Research the options and talk to your financial adviser regarding the different income options available. For more information on Living and Life Annuities watch our short video tutorial. You can also read more about our products by selecting one of the following product links: Old Mutual Unit Trusts Living Annuity or a MAX Income option - Income for Life or Investment Funded Income.


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