If you think of your retirement savings journey as a Dakar, there’s a terrific way of improving your chances over the killer dunes, writes Pieter Albertyn, Head of Product Solutions at Momentum. I’m not a big motorsport fan, but the Dakar race fascinates me: the excitement but especially the endurance. And I can’t help comparing the detailed planning and navigation of the participants with my retirement savings journey. And how you must do your best to stay on track.
What’s happening under the engine cap for this race is always improving, and rapidly so. I believe diesel or petrol internal combustion engines are still the most popular for the necessary horsepower, but electric and hybrid engines are also showing face. Almost like the financial services industry that’s shifting its focus to more modern products and ways, including the two-pot changes.
But fortunately improving your retirement annuity’s horsepower is a much simpler discussion than that for a car. You don’t have to be a technological genius. You don’t need a blue overall or to get your hands dirty either.
All you need to do is add a once-off investment to your regular retirement savings.

Most people prefer to do this before the end of the tax year on 28 February. This is because of the huge tax breaks you can get, and most people want to make the most of that every year. The percentage you get back in your pocket for every rand you put in is the same as the income tax you normally pay, your so-called marginal tax rate.
This means if you add a bonus of R10 000 to your retirement savings and you usually pay a tax rate of 25%, you get your investment at a huge discount. It will cost you only R7 500 to invest R10 000 because of the R2 500 the South African Revenue Service will pay you back.
But first, let me explain the mechanics of how you can rev up your horsepower. My workshop tool is compound interest. The “compound” refers to two kinds of interest working for you – the growth you earn on the money you invest, as well as the growth you earn on that growth. To be practical, let’s add two more ingredients: time and a financial adviser who can help with advice that suits your circumstances best.
We’ve made some sums to illustrate what happens if a person adds a yearly lump sum to their regular retirement investments.
Let’s say our mate Tumiso (30) is earning R30 000 monthly (and pays income tax of 26%). He contributes R4 500 per month to a retirement annuity (RA) and we assume the money grows at 12% per year. We also assume his salary increases by 5% per year, and he will increase his retirement contributions by the same rate.
Now we look over his shoulder over the next 25 years until he reaches the retirement age of 55.
- Scenario 1: He sticks to his plan and adds no further contributions.
- Scenario 2: On top of his monthly investments, he adds a 13th cheque every year.
- Scenario 3: On top of his monthly investments, he reinvests the tax rebate he receives every year.
- Scenario 4: On top of his monthly investments, he adds his 13th cheque as well as the tax rebate he receives every year.
If we round the retirement value off to the nearest million, this will be the picture:
- Scenario 1: Only RA – R21 million
- Scenario 2: RA + 13th cheque – R32 million (53% more)
- Scenario 3: RA + tax rebate – R26 million (25% more)
- Scenario 4: RA + 13th cheque + tax rebate – R37 million (77% more)
(The real value – what the money could buy you today – of the four scenarios are R3,6 million; R5,5 million; R4,5 million and R6,4 million.)
This means the discipline of adding a thirteenth cheque (or similar once-off amount) every year will increase your retirement money by more than 50%. Wow. And if you reinvest your yearly tax rebate on top of that, instead of spending it, your retirement money will be an incredible 77% more. There’s money to be made through regular habits.
With a little imagination, you can see what will happen if you put your retirement money in the fast lane. Don’t ever underestimate the horsepower of compound interest over time. Hopefully, your journey to retirement will be successful, and not as challenging as the Dakar. But follow the example of those incredible vehicles and rev up your retirement savings. Every bit you can add to your retirement money will multiply it with the power of growth on growth over time.