I'm from South Africa, so my currency is Rands (R). I'm earning a decent salary, and I can save a good portion of it per month. I'm 25 years old and plan to retire at 65 or earlier. A retirement savings calculator shows that if I save R15,000 per month, my estimated retirement savings is R28,615,166 at age 65. That works out to around (R28,615,166 / 40 years / 12 months) = R59,614.93 per month.
That seems really decent, but it's trash when I consider inflation. Assuming a 6% inflation rate, R28,615,166 in 40 years time is worth R28,615,166*((1 + 0.06)^(-40)) = R2,782,029.04 today. Effectively that's saving R5,795.89 per month.
I'm not very knowledgeable about finance or economics - what am I missing here? How can retirement saving make any sense if it's just reducing the amount of money I have? Would it not be better to use the money now rather than save it to just deplete over time?
Edit: I also looked into pensions. If I save R9,800 per month I can get R40,000 per month after retirement. That's only worth R3,888.89 in 40 years' time. That is far below minimum wage.
Submitted October 11, 2022 at 04:38AM by CondensedMelk https://ift.tt/RcXaK0V
