“Most of us have conflicting priorities when it comes to affording our current lifestyle and saving for the future,” says Allan Gray’s Wanita Isaacs. “But, what if you realised that the well-researched rule of thumb that a retirement income equal to 75% of your final salary will allow you to comfortably retire is relative? Rules of thumb do not account for personal circumstances,” she adds.

How much is ‘enough’?

Surely, about R1 million is plenty for you to be comfortable after 65?

Not if you look at it this way: If you retired today at the age of 65 and you had R1 million in retirement savings, you could buy an inflation-linked annuity (pension) of between R4 300 and R5 100 a month. If you currently earn more than that, you’re going to have trouble adjusting.

Niel Fourie, public policy actuary at the Actuarial Society, estimates that an average of R5 million would buy a monthly pension of over almost R26 000. In order to save for that amount you’d have to make a monthly contribution of more than the widely held belief of 15% of your salary.

“For years many people have used the previous maximum tax-break of 15% as a savings benchmark, which is too low to reach the recommended 75% income replacement,” says Isaacs. “Even for a 25-year old, investing 15% of taxable income is not enough to ensure a sustainable and comfortable retirement. A safer rule of thumb is to invest at least 17%.”

What you can do today

Here are three steps, or levers to pull, to increase your chances of retiring a millionaire:

1Prioritise your retirement savings

When you get additional income, consider either splitting each individual income boost, or alternate between improving your current lifestyle and increasing your retirement savings.

2Delay your retirement

To give your investment more time to grow, both through your contributions and return on your investment, attempt postponing your retirement by an additional few years. The later you retire the more income you receive from an annuity, as statistically you will be relying on that pension income for less time.

3Decrease your income needs

Rethink your lifestyle priorities now, so you need less to live on when you retire, and it won’t be such a huge adjustment for you.

Want to be a millionaire?

It’s going to take a lot more than a thorough financial plan. It begins with every decision you make from today onwards:

What are you waiting for?

The earlier you start saving the more money you’ll have in your retirement savings. The later you start, the more you’ll have to contribute monthly to reach your desired R5 million goal.

If you’re saving for the first time in your twenties, your contribution towards your retirement should be between roughly R1 000 and R1 200. And that’s just for R1 million.

It seems like a lot, but remember, there are other savings products you can use to supplement your retirement savings.

A tax-free investment account, basic unit trust or any paid-off assets you own contribute towards your retirement by either decreasing your financial needs, or increasing your income in retirement.

Outsmart the debt trap

If you’ve managed to get through university or college without student debt, well done. Not everyone is able to, but if you avoid big debt early on you’ll thank yourself later.

“The big problem is that the lifestyles of young people are being upgraded too fast especially if they are earning money for the first time,” observes Duane Gilbert, head of manager research at Sygnia Asset Management.

“That means spending too much money on a car, clothes and technology, which inevitably gets funded by debt.”

Debt can be unavoidable, but loans and credit card could cripple your savings efforts as you’ll be stuck paying these off over long periods of time instead of saving – plus interest.

If you aren’t currently in a position to save, at least commit to cut down your debt faster. Once your debt is cleared, you can start saving.”

Have a side hustle

You’ve heard it countless times before – that’s because it’s true. You can’t expect to cover your current and future expenses on your salary alone. Retiring a millionaire means not just surviving, but thriving. And you have to start now to live in comfort later.

Running an online business or taking a weekend job means you can pay off your debt faster or contribute more to your retirement savings.

Tighten your belt

The wealthy are known for living far below their means. Take a good look at millionaires the world over, from tech billionaires to software moguls. They dress simply, drive simple cars and live simple lives. This is because they know that when you’re frugal you’re able to invest more money for your future.

How much do you think you need to save every day to build up a R10 million portfolio by the time you’re 65? The daily savings amount is just R31. That’s less than the cost of a pack-a-day smoking habit.

Create a budget. in that way allocations towards savings can be determined.

Estimate your future spending

You can come up with a ballpark figure based on what you’re currently spending in expenses each month. Remember that some expenses will disappear and new ones will replace them.

You may need to downsize, but if you pay off all your debt before retirement, that cost will fall away to make way for medical expenses, for example.

It’s scary to think R1 million may have you living on around R5 000 a month in retirement, but the good news is that you can aim for a larger nest egg by taking the expert advice above. From as little as R31 a day you can retire with R10 million in the bank and for a lot less if you’re aiming for R5 million.

With South Africans now living longer it has become harder to determine how much is ‘enough’ to retire – make sure you put careful planning into your retirement plan, starting with the decisions you make right now.