How our calculations work

Methodology · Last reviewed June 2026

MoneyZap is a financial education tool. Every figure it shows is an estimate based on clearly-defined assumptions and the information you enter — it is not financial advice, and it is not a recommendation to buy, sell, or hold any product. This page sets out exactly how each calculation works, so you can understand the numbers, question them, and discuss them with a registered financial adviser.

Income tax (SARS 2026/2027)

We use the official SARS tax tables for the 2026/2027 year of assessment (1 March 2026 – 28 February 2027).

Rebates: Primary R17,820; Secondary (65+) R9,765; Tertiary (75+) R3,249.

• Effective (average) rate = total tax after rebates ÷ income.
• Marginal rate = the rate on your next rand of income — used for amounts taxed at the margin, such as interest earned on investments.

Life cover — the LIFE method

We estimate the life-cover need as Liabilities + Income replacement + Final expenses + Education, then subtract the cover you already have.

L — Liabilities

The total outstanding balance of your active debts (home loan, vehicle finance, personal loans).

I — Income replacement

• We start with household monthly expenses and subtract debt repayments — those debts are settled separately under Liabilities, so counting them here too would double up.
• We then apply an 80% survivor ratio (a household typically needs around 80% of its prior expenses after one member passes away).
• That annual need is capitalised to your retirement age: the lump sum that, invested today, would replace it each year until retirement.
• The lump sum is assumed to be invested conservatively (stability matters to a survivor), so we discount at a real, after-tax return — roughly a 10% nominal return, less your marginal tax rate (the return is mostly interest, taxed as income), then adjusted for about 4.5% inflation. Because tax already sits in the return, we do not separately gross the income up — that would tax it twice.

F — Final expenses

Funeral costs (R50,000), plus executor's remuneration (3.5% of estate assets + VAT = 4.025%), plus estate duty. Each asset's estate treatment (set on the Investments page) decides what applies:

• In my estate — executor's fee and estate duty.
• Life wrapper (beneficiary nominated) — no executor's fee, but still estate duty (the proceeds are "deemed property", Estate Duty Act s3(3)(a)).
• In a trust — neither (the trust owns the asset, not you).
• Retirement annuities fall outside the estate for both.

Estate duty is 20% of the dutiable estate up to R30m and 25% above, after the R3.5m abatement (s4A) and deducting debts. A bequest to a surviving spouse defers it (s4(q)) — tick "Estate passes to my spouse" on the Insurance page to model that. Whatever an asset's estate treatment, it still counts as an available resource in the cover-sufficiency check.

E — Education

A guide of R500,000 per dependent towards school and tertiary costs.

Is your cover enough? — assets and retirement

The need above is then tested against what your family could actually draw on, so the recommended cover reflects your real position rather than a gross figure:

• Available assets reduce the need — taxed assets first. Your discretionary investments (unit trusts, ETFs, shares, TFSAs, other property) are consumed against the pre-retirement need in a waterfall: taxed holdings first, TFSAs last, preserving tax-free compounding. Your primary residence is excluded — the family must live somewhere — and retirement annuities are excluded here, because they are matched to the retirement step below.
• Anything left over funds retirement too. Assets that survive the pre-retirement need roll forward to retirement age and keep growing in their own tax bucket — TFSAs tax-free (12% p.a.), taxed holdings after tax at your marginal rate. All debit orders continue after death (they are part of the insured expenses) until retirement age, credited monthly, then stop.
• An optional retirement top-up. Because the income replacement only runs to retirement age, we separately check whether the survivor's retirement is funded — using three buckets that are taxed differently. Your retirement annuities grow tax-free (12% to retirement, 10% in drawdown, contributions continuing), but their income is taxed with the SARS age rebates at the retirement age; TFSA income is untaxed; taxed holdings earn after-tax returns with untaxed capital draws. We add up the after-tax income all three can sustain to age 90. Any remaining shortfall against the survivor's need is covered by a top-up of life cover, which — as discretionary capital — grows after-tax (12%/10%) but pays out tax-free. The top-up, discounted to today, is added to the recommended cover, and is toggled by the "Accommodate for shortfall in retirement funds" checkbox.

The result is a clear verdict: either your assets and existing cover are sufficient, or a specific additional-cover figure.

Disability & income protection

We estimate the monthly benefit need as 100% of your monthly expenses (you are still alive and supporting the household), capped at 75% of your gross income — the maximum insurers will typically cover, since a tax-free benefit above your take-home pay would remove the incentive to return to work. These benefits are tax-free in your hands, so no tax gross-up is applied. The extra costs disability can bring — care, medical co-pays, home or vehicle modifications — are not loaded into this monthly figure; they are conventionally covered by lump-sum disability and dread-disease cover alongside it.

Dread disease (critical illness)

A guide figure of 5× your annual income as a lump sum towards treatment, recovery, and lifestyle adjustment.

Retirement & tax-efficiency limits

• Retirement-annuity deductions: up to 27.5% of income, capped at R350,000 per year.
• Tax-free savings: R46,000 per year (raised from R36,000 in the 2026 Budget, effective 1 March 2026), R500,000 lifetime.

Retirement readiness & the earliest retirement age

On Planning Insights we test whether all your investments except your primary residence could fund retirement, using the same three tax buckets as the life-cover analysis: retirement annuities (tax-free growth, income taxed), TFSAs (tax-free both ways) and taxed holdings (after-tax growth, untaxed capital draws). Balances and debit orders are projected to your retirement age (contributions credited monthly, stopping at retirement), each bucket then sustains a level income — in today's money — to age 90, and the total after-tax income is compared with a need of 80% of your current expenses. Any gap is translated into the extra monthly RA debit order that would close it.

We also pinpoint the earliest age at which the plan looks fundable, checking each candidate age year by year. A retirement annuity can legally only pay out from age 55, so for earlier ages the RA stays invested (still compounding tax-free) while the bridge years are drawn from taxed holdings first, then TFSAs — the same taxed-first, TFSA-preserved order as the life-cover waterfall. RA income is taxed with the SARS age rebates for each year actually lived (primary under 65, secondary from 65, tertiary from 75). The first age at which every year to 90 is covered is reported; if a gap remains at your chosen retirement age, we scan the later ages up to 75.

Key assumptions at a glance