The idea that retirees can live comfortably on about 75% of pre-retirement earnings is a common guideline, but it’s increasingly less reliable for South Africans. Here are SA-specific factors and why the rule may not hold:

Healthcare costs and medical aid: Medical scheme premiums have risen faster than consumer price inflation for many households. Out-of-pocket costs for medications and certain procedures can be significant, especially if you require chronic treatment or private care in urban areas.

Housing and living arrangements: Property costs, rates, and utilities in South Africa are volatile. Owning vs. renting, city vs. rural living, and the desire to stay near family or facilities can dramatically affect housing costs, often creatively pushing retirement expenses above a fixed 75%.

Inflation and currency risk: Local inflation, exchange-rate movements for imported goods, and regional price differences can erode purchasing power. A fixed percentage rule overlooks these dynamics.

Longevity and longevity risk: South Africans are living longer, which extends the retirement horizon and raises the risk of outliving savings. Prolonged drawdown under a static rule can be problematic.

Global and local investment returns: Market performance of retirement portfolios in rand terms matters. A 75% rule assumes stable withdrawal behavior relative to returns; in practice, unpredictable markets can deplete savings if withdrawals aren’t adjusted.

Debt and caregiving: Many retirees carry debt (home loans, vehicle finance) or may need to fund caregiving for spouses or family, which can elevate expenses beyond a simple percentage target.

Social grants and income mix: The interaction between the State Old Age Grant, private pensions, and investments varies by household. Reliance on grants may lower required percentages, but many SA retirees depend on multiple income sources with different risk and long-term solvency.

Practical takeaway for SA: develop a personalised retirement plan that models housing, healthcare, transport, and potential caregiving costs, accounts for exchange-rate and inflation risks, and uses flexible withdrawal strategies rather than a fixed 75% target. Consider consulting a local financial planner who understands South Africa’s tax, medical aid, and grant landscape.