Survey: 40% of South Africans more terrified of retirement than death

For 40% of South Africans retiring is a more terrifying prospect than passing on according to the latest survey by Debt Rescue

The survey, conducted among over 1900 South African consumers aged between 25 and 65 years, paints a picture of apprehension and challenges surrounding retirement amongst the country’s citizens. It also sheds light on the significant fears and challenges people face right now in securing savings for their retirement – with prevalent concerns being the high cost of living, unemployment, and personal debt.

This concurs with findings from the 2023 Old Mutual Savings and Investment
Survey (OMSIM) that show that retirement does not feature among the top financial priorities for those surveyed. In 2023 income security (63%), cutting expenses (58%) and paying debt (52%) are the most prioritised, while only 33% of respondents ranked securing their investments and 34% creating an emergency savings fund as a priority.

Another alarming insight from the Debt Rescue Survey is that a full 59% of people polled, admitted to being completely unprepared, having no savings or plan for retirement, while only 4% felt they were fully geared up for retirement. This, despite almost half (47%) of South Africans listing a comfortable retirement as their primary savings goal, according to the 2023 Old Mutual Savings and Investment Survey (OMSIM).

“This means that over half of South African adults will either need to retire later than planned, not be able to retire at all, or will need to rely on their families to support them through their golden years,” says Neil Roets, CEO of Debt Rescue. “If anything, this highlights the need for more accessible avenues for retirement savings.”

Farzana Botha, segment manager at Sanlam Risk and Savings, says: “Being on track to retire comfortably took seventh place in a list of eight defined priorities in a recent retirement survey by Sanlam. For young people in particular, it’s just not a consideration right now, showing the vital need for retirement planning to be reframed to be more relevant.”

On a positive note, slightly over half of the Debt Rescue respondents (51%) have set some form of plan or annuity in place. However, when participants were asked about their confidence in their retirement savings sufficing for a comfortable lifestyle, 40% were not confident at all, while 24% were extremely confident.

The roadblocks to saving for retirement were overwhelmingly led by the high cost of living, with 63% attributing it as their primary obstacle. This was followed by unemployment or unstable income (16%) and high personal or household debt (12%).

A commendable 51% of those polled professed a strong understanding of retirement savings options, such as pension funds, retirement annuities, and provident funds, suggesting a fair level of awareness. In terms of funding mechanisms, personal savings (28%) and employer-provided pensions (24%) were the most cited means for future retirement funding.

Roets says another concerning insight is that only 21% of people start saving for retirement in their 20s, and this drops to 13% and 4.3% for people in their 30s and 40s, respectively. He says there are good reasons to start putting away money towards a retirement fund as early in life as possible. “The primary reason is that the earlier you start saving for retirement, the sooner you can begin capitalising on the effects of compounding returns. There are also many immediate tax benefits, and if you
are employed you can begin saving for retirement by leveraging your employer’s retirement plan. These plans reduce your taxable income, investments grow tax-deferred, and you can double the money through employer matching contributions,” he points out.

“We understand of course, that South Africans are struggling to meet daily costs, never mind setting aside money for retirement savings,” says Roets. “My advice is to consult a financial adviser who can guide you on how to make a smart investment – no matter how small – that can help you make your money grow. A sound financial management plan is another way to gain greater control over your finances, and cultivating a habit of saving for the future, even starting off with just a few rands a month, can set you on
the road to a comfortable retirement.”

The reality is that many South Africans are simply not able to put money away right now because of the relentless cost-of-living increases they have had to absorb over the past few years, and are relying on credit just to make it through the month.

“My advice to those who are struggling with debt is to seek help from a registered debt counsellor. This has been a very successful solution for thousands of consumers who are plagued by over-indebtedness,” concludes Roets.

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