Main Article Content
Retirement adequacy goals for South African households
Abstract
Despite the importance of retirement adequacy goals to public policy, retirement fund design and personal financial planning, there has been little formal research on the estimation of retirement adequacy goals for South African households. This research derived estimated retirement
adequacy goals for employed one- and two-adult households. A consumption-smoothing model with a minimum-income underpin was developed to estimate wealth–earnings ratio goals using data from the Income and Expenditure Survey 2005–2006. Household wealth–earnings ratio goals were estimated to be between 10,5 and 18,2 times annual salary depending on retirement age, household composition, income, location, age, education, household income distribution, home ownership and salary support. Considering current retirement savings rates, retirement before age 67 is unlikely to be affordable for most households.
adequacy goals for employed one- and two-adult households. A consumption-smoothing model with a minimum-income underpin was developed to estimate wealth–earnings ratio goals using data from the Income and Expenditure Survey 2005–2006. Household wealth–earnings ratio goals were estimated to be between 10,5 and 18,2 times annual salary depending on retirement age, household composition, income, location, age, education, household income distribution, home ownership and salary support. Considering current retirement savings rates, retirement before age 67 is unlikely to be affordable for most households.
