Capital you need, your projected savings, and the top-up to close the gap.
Monthly top-up needed
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Capital needed
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Projected savings
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Gap
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Turning a retirement income into a capital number
Most people think about retirement as an income, what they want to live on each month, but funds are built as capital, a single pot of savings. This calculator bridges the two. You tell it the annual income you want and a safe drawdown rate, and it converts that into the lump sum you need on the day you stop working. It then grows your current savings forward, compares the two, and solves the monthly amount you would have to add to close any gap. Unlike the tax tools on this site, the numbers here are planning assumptions about growth and drawdown, not SARS figures, so they are yours to set.
The drawdown rate sets the size of the target
The capital you need is simply your target income divided by the drawdown rate. Draw at 4 percent and you need 25 times your annual income; draw at 5 percent and 20 times. South African living annuities are legally restricted to drawing between 2.5 percent and 17.5 percent of the remaining capital each year, and this tool keeps your input inside that band so the target stays realistic. A lower drawdown is safer against running out, but it demands a bigger pot. That single percentage is the most powerful lever on the page, so it pays to test a few.
A 25-year plan, worked end to end
Take someone 25 years from retirement who wants R360,000 a year, has R500,000 saved today, expects 9 percent annual growth, and plans a 4 percent drawdown. The target capital is R360,000 divided by 4 percent, which is R9,000,000. Growing R500,000 at 9 percent for 25 years gives about R4,311,540. That leaves a gap of roughly R4,688,460. Solving the monthly contribution that grows to fill that gap over 25 years at 9 percent gives about R4,182 a month.
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The chart below shows the two pillars, projected savings against the capital needed, with the gap the monthly top-up has to fill.
The inflation blind spot to watch
The most common mistake with a tool like this is forgetting that R360,000 will not buy in 25 years what it buys today. If you want the equivalent of today's R360,000, inflate that target before you type it in, or work in real returns by entering a growth rate net of inflation, perhaps 5 or 6 percent rather than 9. The same goes for your monthly top-up: a fixed R4,182 a month gets easier to afford as your salary rises, so escalating the contribution each year is realistic and shrinks the figure the calculator shows for the early years.
Why does a small change to the drawdown rate move the target so much?
Because the target is income divided by the rate, the relationship is not linear. Moving from a 4 percent to a 5 percent drawdown cuts the capital needed from 25 times income to 20 times, which on a R360,000 income is R1.8 million less to save. A higher drawdown reaches your number faster but raises the risk of depleting capital in a long retirement, so it is a trade-off between feasibility now and security later.
Should I include the state old-age grant in my target?
If you expect to qualify for the South African state old-age grant, you can reduce your target income by that amount, which lowers the capital you need to fund privately. The grant is modest and means-tested, so treat it as a small buffer rather than a foundation. Most people building a retirement plan size their own capital to cover the bulk of their income and view any grant as a bonus.