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To be fair, your local also has a huge overseas component - so it's more like 75/25 - which is a good thing. Overseas, a 4% draw down (and upped every year by inflation) is recommended - as in, in almost all scenarios, the person never runs out of money. The further you push it, the more likely you might run into problems. 5% is not too far out, but tweaking the budget might be worth it for the first few years and see how it goes.

Also, of course, look at being tax efficient.

Might be worth putting R500k in a couple of high yielding property REITS - some paying 12-16% - (TEX, DLT, TWR) - might get you close to 5%

4 % on 5mill and 12% on 500K gets to R260K vs R275. That said, the full amount gets added to income vs capital gains rules for the rest so might not be as attractive depending on your tax situation.

Hi Pension, I think you might be using the calculator incorrectly. The way you've done it assumes no draw down. If you want to test a draw down you should add a negative monthly contribution equal to your draw down. Your 6.7% investment yield is also very low for the JSE. Figures around 15% are more likely over time.

But the 4% rule of thumb is a good one, 5% has been possible in the past many times, and 3% is pretty much foolproof.

Another calculator to use which uses world stock market returns is the C FireSim http://www.cfiresim.com/

It's much more complicated but will give you an estimate on your chances of success.

Nothing wrong with the numbers, but you might be assuming that growth will be linear, but it won't. In some years the market will go up 15%, in some up 30%. In some it could go down 40%. On average though, it'll go up.

The 4% rule is there to protect against running out of money. It's not perfect, but it's likely good enough. In most cases, like your calculations below show, drawing 4% a year will have you much richer when you die than when you started, but in most

If the market went up by 15% every year it would make retirement planning really easy, but sadly that's not how it works.

That's pretty much the default use of the 4% rule, but there are a lot of strategies that will work. The key is to build in a buffer, either through extra cash or through a little more flexibility to cut costs if needed.

Here's a blog I wrote last month with a different strategy: https://investorchallenge.co.za/the-5-rule-that-has-never-failed/