News | Opinion | Editorials
By now, most people will have heard of “Long Covid”, the medical description of the lingering effects of the disease caused by the coronavirus – where people continue to suffer ill-effects long after they have supposedly recovered.
Financial experts are now warning that the financial pressure put on households by the Covid pandemic, on top of the tough economic climate over the past few years, could have equally devastating long-term impacts on future pensioners.
That is simply because people will not be able to afford to retire because they have been unable to put aside enough money for their “golden years” due to having to live a hand-to-mouth financial existence from day to day.
This situation could see the creation of yet another “lost generation” in South Africa, those who will be thrust into near-poverty when they give up work.
Early access to pension funds unwise
It is a worrying reality that these people will find themselves part of what is called the “sandwich generation” – where they have had to financially support their children as well as their parents.
That means many are focusing on mere survival, rather than thinking ahead 30 or 40 years.
Sanlam’s most recent Benchmarks Survey indicates that eight out of every 10 local retirement fund members have experienced a reduction in their annual salary increase and/or their net income.
In addition, some of these people took a forced sabbatical or went through a retrenchment process duringthe pandemic.
Experts on the fence about idea of pension fund withdrawal
On the positive side, the survey points to the fact that the often-maligned millennials – roughly those between 23 and 38 – are good at balancing spending money on education and their children as well as saving for retirement.
How to save and plan for retirement needs to be taught much earlier in school … because the one certainty in life is that there will be rain days ahead.