8 out of 10 South Africans to work past retirement due to lack of retirement savings
With their daily struggles to put food on the table and pay their debts, few South Africans can save for retirement.
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At least 8 out of 10 South Africans plan to work past retirement age due to lack of retirement savings. Four out of 10 participants without a retirement plan will rely on selling assets or government social grants.
The findings of the inaugural FNB Retirement Insights Survey paint this grim picture. It’s well known that South Africa lacks a savings culture and the survey unveils some reasons for the disparities in retirement savings beyond apathy or income.
According to the survey’s results, an alarming 89% of respondents plan to continue working – or work part-time – because they did not save enough for retirement. Also, 74% claim they have a plan in place to help them prepare for retirement although many of them, particularly in lower-income brackets, are not confident that their plan will work due to barriers such as age and current financial constraints, such as the high cost of living.
Of the respondents who do not have a retirement plan, 39% said they will rely on alternative income sources for retirement, such as selling assets, family support, or government social grants.
“The findings highlight the need for South Africa to place retirement planning firmly on the national agenda. While our country continues to implement structural reforms to improve access to retirement savings and prevent potential abuse of retirement funds, there is an urgent need to provide accessible solutions and education for consumers to help them better plan for retirement,” Sizwe Nxedlana, CEO of FNB Private Segment, says.
“We must also start retirement conversations and create a savings culture from the first day we start earning an income, within the limitations of volatile economic conditions that continue to affect incomes. As a financial institution that advocates for advice-led financial services, retirement solutions are among our top priorities for customers, irrespective of how much income they earn.”
However, it was encouraging that 86% of the respondents said they use bank savings accounts as part of their retirement planning, while 45% said they have a retirement annuity.
“Despite this, the findings show that respondents in the entry-level, middle-income and emerging affluent categories are highly unlikely to maintain their current lifestyle in retirement.”
Nxedlana says only affluent and wealthy respondents are likely to maintain their current lifestyles in retirement. The survey also established that the respondents who are of retirement age only started saving for retirement after the age of 30, which is late by industry benchmarks.
Lytania Johnson, CEO of FNB Personal Segment, believes that the challenges highlighted in the survey point to broader challenges with financial wellness beyond retirement. Consumers’ ability to manage their money today is crucial to their ability to afford a retirement that mirrors their current or preferred lifestyle.”
She says it is therefore extremely concerning to see the statistics indicating that a large proportion of respondents who did not plan for retirement may rely on social grants as part of their retirement.
“As a financial institution, we believe we are in a better position to provide not only the right advice, but also the solutions they require for retirement planning. It is not enough to only offer retirement savings products. Financial institutions must provide holistic support for customers to maximise their income for short-term and long-term goals.”
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