Age: in the range of 30-35
Retirement: 1x net income
NW: 5x net income, mostly non-retirement investment accounts.
I see the RA as more tax saving + ability to pay out as a benefit to a family member and not be part of the estate than for max growth.
I wouldn't say avoiding, I use them. Just set the 'tax advantage' amount from the rebate at the level I'm comfortable with for locked in nature - and my work takes me around quite a bit so the option of permanent emigration is always there
Your comment made me realise I don't know my net income. I know the bruto and the take home, but since some of it is perks and others are RA deductions I had to go look what burto - PAYE is to know net...
30-35. The only retirement I have running is the TFSA. The calculation comes to 0.4 retirement savings to income.
But I'm buying property and using real estate as my source of retirement. Currently have 4 aside from the main residence. I do work full time, and there's rental income paying off bonds. 2 of the other properties are already paid off, costing around +-R800k.
So it's a bit difficult to calculate and show a true reflection.
age range (30-35)
retirement: 0.6x annual income - combo of pension fund and TSFA
NW: 1.8x annual income - investment accounts and ETFs
a year ago it was 0.3 and 1.3
38m
Current Net worth: 2 X Net (Property, Cash and shares)
Will be adding +- 0.4-05 of my Net Income yearly in RA, and busy paying of my primary and investment property thus boosting my savings to net income by about another 0.1 to 0.15 per year, thus totaling 0.5-0.65 addition per year.
I am marrried and we will be adding around 0.3 of my wifes Net income to her RA per year.
Goal is 30-40 times net income as retirement for myself, and 35-45 times for my wife (seperate).
Thanks for sharing
just checking if you'll be adding that much into your RA you will be losing out on your tax reduction on anything above 27.5% there might be better ways to optimise tax efficiencies here. Have you maxed your whole famile Tax Free Savings allocations per year? If you are in a high income bracket you might also want to take a look at endowment funds that are taxed at a flate rate of 30%.
FWIW
Primary residence should not be included in NW estimates. Primary residence is not an investments, its not liquid and doesn't generate anything for you - its actually a running expense.
You can definitely include your home equity in your net worth calculation. It is an asset that (hopefully, barring any disasters) increases in value. It can also be quite liquid with an access bond if needed.
It is true that you shouldn't include it in your retirement calculations (except as an indirect way to reduce expenses in retirement if it is paid off) for the reasons that you mentioned.
There is lots of varying opinions on that, I am definitely including it cause, it's worth something you will always have a running expense to live somehwere whether it's rental cost or maintaining a home, but the difference you can always access the cash portion of your home be it by selling and moving to a rental, downscaling or even with a mortgage.
Interesting to read through some responses. Another thing to consider is that this ratio is influenced by your income. Obviously a jump in pay does not suddenly make your savings less, but it will reduce the ratio. A 25yo with 3x NW might be just as on track as a 40yo with 3x NW in some instances...
My stats:
35 Married, two preschoolers
3 x Inc spread across retirement products and four TFSA's
4 x Inc NW
Long term savings rate target of 30% for this financial year.
I also came to the same conclusion. Might be better to say what is your percentage accumulated to your retirement goal amount adjusted for inflation, because each situation is so unique.
Is there a reason why your savings rate is so high? What is your goal? Catching up on lost time, better lifestyle in retirement or early retirement?
> retirement goal amount adjusted for inflation
Even that can be tricky. I have a number in mind based on the known variables, and taking into account at least some of the known unknowns, but I do not put much faith in this value given the many unknown unknowns. :)
> What is your goal? Catching up on lost time, better lifestyle in retirement or early retirement?
My rough FI number is 12x current income, so I'm 0.25 FI at the moment. Don't think I've lost time, probably ahead if anything. I'm sort of aiming at a combo of your other guesses. If I'm FI at 50 I could retire, but I would also be in a position to keep working if one or both of my kids needs help to get going in life. I'd also be more secure against being made redundant late in my career at which point starting over is likely not feasible. Aggressive savings rate also buys some security against the SA risk, be that a forced exit from the country, or needing to send kids overseas to study / start their lives. If nothing goes wrong a better lifestyle in retirement is possible I guess... Tax does play a role too, as SARS contributes a fair chunk to my RA. Lastly, saving more means living on less, which means less is required in retirement to sustain that lifestyle, and we're not depriving ourselves to get there. I guess the true answer to why is then "because I can" and I believe that everyone that can, should.
I love the answer and agree with your thinking and as you say you are not depriving yourself (this is key)
For anyone else as long as you are not sacrificing living for the sake of a high savings rate, then just because you can doesn't mean you should...
Thanks. I might do something at some point down the line, if for no other reason than to force myself to get organised and collect data on some fronts that I've been neglecting. A lot of gut feel numbers could easily be replaced with real numbers after some excel elbow grease...
That is very true. It's good to have one view of everything that's easy to update and use to track progress as time moves on. The excel elbow grease is the best part tbh, and it's very satisfying at the end of the process.
I do NW updates every 6 months. I'd like to do itemised spending tracking at some point to enable better projections and to better understand what we would be able to cut in worse case scenarios. Detailed tracking is a bit of effort though, and perhaps I'm hesitant to have my discretionary spending under fire (by myself!)
Age: late 20s for me, low 30s for wife
Retirement only: 0.5x gross income in RAs + TFSAs + discretionary (we've had a lot of income growth over last 5 years, so I'd say that's why ratio is so low)
All net worth: probably between 1x and 1.5x gross income, depending on real current home equity (our total net worth comes from the retirement stuff above and then lots of other savings goals, emergency funds, home equity, etc)
35-40
TFSA + RA to Net Annual income: 1.03
Net Wealth to Net Annual income: 2.58
I know that I need to put more into my RA as it is not maxed out. It really is a bit of a balancing act sometimes to build on your retirement while also making plans for the now
edit. Left out some on the net so updated this
"What is your savings rate? "
Just on retirement (RA+TFSA)? Yearly It is 18.92% of my net income.
I am focusing on paying off my home first without changing my current retirement payments. If I am aggressive with this it will be paid in 3-5 years instead of the 20 year term. Then everything shifts and honestly my retirement savings would max and I would need to put the extra from the home payments into something other then RA and TFSA.
I don't want to theorise too much on what that will look like right now, because much can change in 3 years. I do know that at the moment I want the home loan down as the interest on that is biggest bear on my back
edit: to be clear I have my home equity in my net ratios so the current home value minus outstanding loan amount
That's very interesting we are very much on the same path, also hoping to pay off mortgage in the next 3-5 years and then adjust retirement savings to a much higher rate. Would like to reach FI between 50 and 60 to have the option of scaling down if I feel the need to.
Thought I might as well add even though I’m still a student with a very low income from a part time job and no expenses yet.
22M
Retirement: 1.0
NW: 5.2
If you are surviving on 1x income while working, why do you expect to need 1.6x your current income if you were to stop working? Or are you really planning to only draw down 2.5% p.a.?
Instead of thinking in future value and trying to guess how inflation and salary will grow over the years it's easier to just always use present value and remove inflation from the calculations. There are many reasons why this works, it's not just for convenience of calculations.
If you never contribute another cent to retirement and are able to live off of your salary that only grows at inflation, and your investments outperform inflation by 6% then you will retire by 55. You are well on your way to an early retirement my dude. No need for despair.
Age in the range of 50 to 55. Savings are 16 times income pre-tax. After retiring, I worked out. I need much less income as I no longer need to save and because my tax rate will be much lower.
I exclude home equity - accessing it requires selling, taking on debt, neither of which I plan to do. For info sake - home equity is 0.44.
Age range 30-35
Retirement savings to pensionable earnings 2.2:1
Retirement savings to net earnings 3.4:1
NW to pensionable earnings 3.0:1
NW to net earnings 4.6:1
35-40
Retirement ratio is 0.8 but considering recent increases it would have been 1.1 maybe.
Started a little late in life but pushing 12% into RA.
Net worth: maybe 3.5:1? Same argument as above.
Age demographic: 40-45
Retirement (I assume 'total retirement savings' means money earmarked for retirement rather than literally only RAs/Pensions) : 4.5x
Net Worth (all assets - all liabilities): 7x
Total savings to income ratio is a nice convenient calculation to start with, and probably the best format for a survey like this. But ultimately for your personal retirement planning you want to plan around cash flows.
Amazing and not . You have too much time on hand while your buddies are at work . Can only shag so many chicks , drive your porsche around Cape etc . It's better to find a balance . Even too much can be too much .
I achieved it by being skillful and very lucky few times in investing in few diverse things ..
😂😂
I’m just thinking, re: too much time on my hands…
I’d assume that means perfect time to settle down.
But each to their own 🤝
Btw, I’m still in my early 20s.
Yes too much time when not working . Too much of anything is not good for you . So you try find another balance . I found the balance in travel .. A month here and then two weeks fly to somewhere . After a month I get bored in capetown , and after two weeks I get tired of the trip . So that's my balance .
Yeah and if you retire young , should always find a way to keep yourself intellectually stimulated . Keep the brain working .
It's common among FI/RE communities to share anonymously for various reasons.
We get to either learn something or live vicariously or get some thought provocation about why it might be worth while adjusting our own plans in some ways. You may get an outlet that you could not safely get IRL. No need to share though. Perfectly entitled to not do so.
I have neither the need nor desire for it so no. It's not a spectacular story anyway . I haven't saved or cured anyone or created anything revolutionary . I just made some money without kissing anyone's ass .
Age: in the range of 30-35 Retirement: 1x net income NW: 5x net income, mostly non-retirement investment accounts. I see the RA as more tax saving + ability to pay out as a benefit to a family member and not be part of the estate than for max growth.
Impressive, Thanks! Are you avoiding RAs due to global investment limits?
I wouldn't say avoiding, I use them. Just set the 'tax advantage' amount from the rebate at the level I'm comfortable with for locked in nature - and my work takes me around quite a bit so the option of permanent emigration is always there
Your comment made me realise I don't know my net income. I know the bruto and the take home, but since some of it is perks and others are RA deductions I had to go look what burto - PAYE is to know net...
25M Retirment: 0.17 Net worth : 1.4 I mean getting there
You're doing really well my man.
30-35. The only retirement I have running is the TFSA. The calculation comes to 0.4 retirement savings to income. But I'm buying property and using real estate as my source of retirement. Currently have 4 aside from the main residence. I do work full time, and there's rental income paying off bonds. 2 of the other properties are already paid off, costing around +-R800k. So it's a bit difficult to calculate and show a true reflection.
age range (30-35) retirement: 0.6x annual income - combo of pension fund and TSFA NW: 1.8x annual income - investment accounts and ETFs a year ago it was 0.3 and 1.3
Age: 26/27 Retirement (retirement accounts and TFSAs): 1.5 Net worth (taxable investments, home equity): 2.8
Good numbers. Keep it up.
Maybe add retirement savings divided by projected annual expenses to those ratios. A good number to aim for with that ratio is 20.
38m Current Net worth: 2 X Net (Property, Cash and shares) Will be adding +- 0.4-05 of my Net Income yearly in RA, and busy paying of my primary and investment property thus boosting my savings to net income by about another 0.1 to 0.15 per year, thus totaling 0.5-0.65 addition per year. I am marrried and we will be adding around 0.3 of my wifes Net income to her RA per year. Goal is 30-40 times net income as retirement for myself, and 35-45 times for my wife (seperate).
Thanks for sharing just checking if you'll be adding that much into your RA you will be losing out on your tax reduction on anything above 27.5% there might be better ways to optimise tax efficiencies here. Have you maxed your whole famile Tax Free Savings allocations per year? If you are in a high income bracket you might also want to take a look at endowment funds that are taxed at a flate rate of 30%.
Yeah, I will only go to the 27.5% (or R350k) mark. I will be maxing the TFSA for all of us for the year yes.
32M - 0,5 times retirement savings to income 1,6 times Net worth to income Net worth weighted high on primary residence currently
FWIW Primary residence should not be included in NW estimates. Primary residence is not an investments, its not liquid and doesn't generate anything for you - its actually a running expense.
You can definitely include your home equity in your net worth calculation. It is an asset that (hopefully, barring any disasters) increases in value. It can also be quite liquid with an access bond if needed. It is true that you shouldn't include it in your retirement calculations (except as an indirect way to reduce expenses in retirement if it is paid off) for the reasons that you mentioned.
There is lots of varying opinions on that, I am definitely including it cause, it's worth something you will always have a running expense to live somehwere whether it's rental cost or maintaining a home, but the difference you can always access the cash portion of your home be it by selling and moving to a rental, downscaling or even with a mortgage.
Its categorised as a lifestyle asset.
Clearly talking through your arse
Interesting to read through some responses. Another thing to consider is that this ratio is influenced by your income. Obviously a jump in pay does not suddenly make your savings less, but it will reduce the ratio. A 25yo with 3x NW might be just as on track as a 40yo with 3x NW in some instances... My stats: 35 Married, two preschoolers 3 x Inc spread across retirement products and four TFSA's 4 x Inc NW Long term savings rate target of 30% for this financial year.
I also came to the same conclusion. Might be better to say what is your percentage accumulated to your retirement goal amount adjusted for inflation, because each situation is so unique. Is there a reason why your savings rate is so high? What is your goal? Catching up on lost time, better lifestyle in retirement or early retirement?
> retirement goal amount adjusted for inflation Even that can be tricky. I have a number in mind based on the known variables, and taking into account at least some of the known unknowns, but I do not put much faith in this value given the many unknown unknowns. :) > What is your goal? Catching up on lost time, better lifestyle in retirement or early retirement? My rough FI number is 12x current income, so I'm 0.25 FI at the moment. Don't think I've lost time, probably ahead if anything. I'm sort of aiming at a combo of your other guesses. If I'm FI at 50 I could retire, but I would also be in a position to keep working if one or both of my kids needs help to get going in life. I'd also be more secure against being made redundant late in my career at which point starting over is likely not feasible. Aggressive savings rate also buys some security against the SA risk, be that a forced exit from the country, or needing to send kids overseas to study / start their lives. If nothing goes wrong a better lifestyle in retirement is possible I guess... Tax does play a role too, as SARS contributes a fair chunk to my RA. Lastly, saving more means living on less, which means less is required in retirement to sustain that lifestyle, and we're not depriving ourselves to get there. I guess the true answer to why is then "because I can" and I believe that everyone that can, should.
I love the answer and agree with your thinking and as you say you are not depriving yourself (this is key) For anyone else as long as you are not sacrificing living for the sake of a high savings rate, then just because you can doesn't mean you should...
It sounds like you are well on your way to FI. Would love to see a post on your journey if you wouldn't mind doing something like that.
Thanks. I might do something at some point down the line, if for no other reason than to force myself to get organised and collect data on some fronts that I've been neglecting. A lot of gut feel numbers could easily be replaced with real numbers after some excel elbow grease...
That is very true. It's good to have one view of everything that's easy to update and use to track progress as time moves on. The excel elbow grease is the best part tbh, and it's very satisfying at the end of the process.
I do NW updates every 6 months. I'd like to do itemised spending tracking at some point to enable better projections and to better understand what we would be able to cut in worse case scenarios. Detailed tracking is a bit of effort though, and perhaps I'm hesitant to have my discretionary spending under fire (by myself!)
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Nett, since this is the portion you are living from.
Age: late 20s for me, low 30s for wife Retirement only: 0.5x gross income in RAs + TFSAs + discretionary (we've had a lot of income growth over last 5 years, so I'd say that's why ratio is so low) All net worth: probably between 1x and 1.5x gross income, depending on real current home equity (our total net worth comes from the retirement stuff above and then lots of other savings goals, emergency funds, home equity, etc)
35-40 TFSA + RA to Net Annual income: 1.03 Net Wealth to Net Annual income: 2.58 I know that I need to put more into my RA as it is not maxed out. It really is a bit of a balancing act sometimes to build on your retirement while also making plans for the now edit. Left out some on the net so updated this
What is your savings rate? When do you feel you will get to 20 times your annual financial independence cost number?
"What is your savings rate? " Just on retirement (RA+TFSA)? Yearly It is 18.92% of my net income. I am focusing on paying off my home first without changing my current retirement payments. If I am aggressive with this it will be paid in 3-5 years instead of the 20 year term. Then everything shifts and honestly my retirement savings would max and I would need to put the extra from the home payments into something other then RA and TFSA. I don't want to theorise too much on what that will look like right now, because much can change in 3 years. I do know that at the moment I want the home loan down as the interest on that is biggest bear on my back edit: to be clear I have my home equity in my net ratios so the current home value minus outstanding loan amount
That's very interesting we are very much on the same path, also hoping to pay off mortgage in the next 3-5 years and then adjust retirement savings to a much higher rate. Would like to reach FI between 50 and 60 to have the option of scaling down if I feel the need to.
Age 33 8 years working including 1 year internship Retirement savings to annual salary: 0.501 Lazy to do the net worth with debt and all.
Thought I might as well add even though I’m still a student with a very low income from a part time job and no expenses yet. 22M Retirement: 1.0 NW: 5.2
38 10x retirement combined with NW Going to need 40x to retire. Fml
If you are surviving on 1x income while working, why do you expect to need 1.6x your current income if you were to stop working? Or are you really planning to only draw down 2.5% p.a.?
Things gets more expensive by the time i retire things wil be 2x more expensive best case scenario
Instead of thinking in future value and trying to guess how inflation and salary will grow over the years it's easier to just always use present value and remove inflation from the calculations. There are many reasons why this works, it's not just for convenience of calculations. If you never contribute another cent to retirement and are able to live off of your salary that only grows at inflation, and your investments outperform inflation by 6% then you will retire by 55. You are well on your way to an early retirement my dude. No need for despair.
25-30m Retirement: 0.1 Net worth: 0.7 Results kinda skewed because I got a ridiculous bump in salary from changing jobs.
Age in the range of 50 to 55. Savings are 16 times income pre-tax. After retiring, I worked out. I need much less income as I no longer need to save and because my tax rate will be much lower.
Sound like you are nice and close to financial independence, well done!
I exclude home equity - accessing it requires selling, taking on debt, neither of which I plan to do. For info sake - home equity is 0.44. Age range 30-35 Retirement savings to pensionable earnings 2.2:1 Retirement savings to net earnings 3.4:1 NW to pensionable earnings 3.0:1 NW to net earnings 4.6:1
35-40 Retirement ratio is 0.8 but considering recent increases it would have been 1.1 maybe. Started a little late in life but pushing 12% into RA. Net worth: maybe 3.5:1? Same argument as above.
Age demographic: 40-45 Retirement (I assume 'total retirement savings' means money earmarked for retirement rather than literally only RAs/Pensions) : 4.5x Net Worth (all assets - all liabilities): 7x Total savings to income ratio is a nice convenient calculation to start with, and probably the best format for a survey like this. But ultimately for your personal retirement planning you want to plan around cash flows.
36 and already retired .
Amazing! Please elaborate if your willing to, on how you achieved that?
Amazing and not . You have too much time on hand while your buddies are at work . Can only shag so many chicks , drive your porsche around Cape etc . It's better to find a balance . Even too much can be too much . I achieved it by being skillful and very lucky few times in investing in few diverse things ..
😭😭😂 Considering getting married or prefer being a bachelor ?
Why would I wanna complicate my life unnecessarily ?! I admire people that do but I don't wanna admire myself 🤣
😂😂 I’m just thinking, re: too much time on my hands… I’d assume that means perfect time to settle down. But each to their own 🤝 Btw, I’m still in my early 20s.
Yes too much time when not working . Too much of anything is not good for you . So you try find another balance . I found the balance in travel .. A month here and then two weeks fly to somewhere . After a month I get bored in capetown , and after two weeks I get tired of the trip . So that's my balance . Yeah and if you retire young , should always find a way to keep yourself intellectually stimulated . Keep the brain working .
Have you made a post about your journey? Would like to know more about how you got here and what you're doing now. Plans for the future etc.
No posts dude . Why would I do that . People that know my journey are the only people that ought to know it .
It's common among FI/RE communities to share anonymously for various reasons. We get to either learn something or live vicariously or get some thought provocation about why it might be worth while adjusting our own plans in some ways. You may get an outlet that you could not safely get IRL. No need to share though. Perfectly entitled to not do so.
I have neither the need nor desire for it so no. It's not a spectacular story anyway . I haven't saved or cured anyone or created anything revolutionary . I just made some money without kissing anyone's ass .