Point of view: Most South Africans are strapped for cash and can’t retire comfortably

Reasons for no retirement included, but were not limited to, raised inflation, high interest rates, record unemployment. Picture: Independent Newspapers

Reasons for no retirement included, but were not limited to, raised inflation, high interest rates, record unemployment. Picture: Independent Newspapers

Published Feb 11, 2024

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Six percent of the country’s population is on track to retire comfortably, and the rest have not adequately planned for retirement.

Reasons for no retirement included, but were not limited to, raised inflation, high interest rates, record unemployment, and a failure on the part of the government to stimulate economic growth, highlighted in 70% of respondents who stated that they did not have enough money left over to save at the end of the month.

This information is contained in the sixth edition of the recently released 10X Investments Retirement Reality Report 2023/2024. 10X Investments is a licensed financial services provider and pension funds administrator.

The report is based on the findings of the 2023 Brand Atlas Survey. Brand Atlas tracks and measures the lifestyles of the universe of 15.4 million economically active South Africans – defined as those living in households with a monthly income of more than R6 000, aged 16+, with internet access, through online completion surveys.

According to the report, the majority of South Africans have not formally planned for retirement, and those who have planned are not confident that they are on track to be able to support themselves for the long term, considering inflationary pressures and the economic climate.

10X Investments chief executive officer Tobie van Heerden said in comparison with 2022’s survey, the 2023/24 report found an increase in the number of people recognising the importance of having a retirement plan in place.

“The difference between what South Africans expect their retirement to look like and the realities faced by those in retirement and approaching it, cannot be underestimated.

“Knowledge and information are key to closing the expectation-reality gap – in their long-term interests South Africans need to be better informed on the importance of saving, the power of compound interest, the consequences of not saving, the additional disadvantages that women need to overcome, and the impact of costs,” said Van Heerden.

The report revealed that 29% of people over 50 indicated that their plans were “definitely not” or “probably not” on track.

The report said almost three-quarters of respondents (72%) whose plans were not on track gave “I am not able to save enough” as a reason.

“This ties in with reasons given for not having a retirement plan in the first place: 70% of respondents without a plan agreed with the sentence: ‘I cannot afford to save, I have nothing left over at the end of the month’,” it said.

Van Heerden said: “Year after year, we are seeing a large proportion of respondents that have been partially or strongly of the view that they will need to continue earning a living after their formal retirement date.”

Forty-nine percent of all female respondents to the survey indicated that they do not have a retirement plan, compared with 43% of men.

“More than double (11% versus 5%) the number of men than women said they were diligently following a well-conceived retirement plan.

“Women tend to save more than men (30% of women versus 26% of men), while men tend to invest more (24% of men versus 14% of women),” the survey found.

According to the survey, fewer people were able to retire on their terms. “This trend reflects the challenging economic times we are living in, indicating a rise in employers compelling their older workers to take early-retirement packages,” Van Heerden said.

* Maleke is the Personal Finance content editor.

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