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Shrinking wallets mean retirement could be a pipe dream for many — Sanlam Benchmark Survey 2023

Shrinking wallets mean retirement could be a pipe dream for many — Sanlam Benchmark Survey 2023
Sanlam head office in Bellville. (Photo: Gallo Images / Jacques Stander)

The survey further found that 63% of South Africans were anxious about their finances, with 87% saying they felt financial stress. For 58%, this was affecting their physical and/or mental wellbeing.

A landscape of pressing immediate financial concerns that leave little to no room for retirement savings could well mean that the concept of retirement is a thing of the past, the Sanlam Benchmark Survey 2023 shows. 

The survey revealed that 75% of the respondents (the sample was 500 full-time employed people) contribute to some form of retirement fund, and 25% do not. 

Sanlam Corporate’s chief executive, Kanyisa Mkhize, says it is worth noting that 30% of individuals were unsure about how much to save, 47% lacked clarity about which pension product to invest in, and 48% failed to include future medical aid contributions in their financial planning.

As many as 40% said that if they were to opt out of their retirement fund, it would be because their current financial needs are too large, and they need the money now. The goal of the proposed two-pot retirement system, aimed at providing early access to retirement savings, is to address this. It is intended to strike a balance between long-term retirement savings goals while providing access for emergencies and other unexpected events. However, the implementation date has already been pushed out once from 1 March this year to 1 March 2024, and the industry is warning that time is running out for proper planning.

The survey further found that 63% of South Africans were anxious about their finances right now, with 87% saying they felt financial stress. For 58%, this was affecting their physical and/or mental wellbeing. 

The findings are unsurprising. DebtBusters data show that while nominal incomes are 2% higher than in 2016, cumulative inflation growth of 40%, means that people are taking home 38% less in real terms than they did seven years ago. Over the same period (2016 to 2023), the petrol price almost doubled, and the cost of electricity went up by 90%.

The idea that retirement may be a pipe dream for many is reinforced by the finding that one in five respondents believed they may never be able to retire. A further 42% said they felt a sense of insecurity or lack of control over their financial future. 

Mkhize says the biggest financial concerns for South Africans revolve around the fear of running out of money during retirement and the risk of facing unexpected financial challenges such as significant medical expenses without sufficient savings as a safety net. 

“The findings reveal that one in five adults in South Africa did not have any form of medical aid coverage, while 25% were not members of an employer’s pension or provident fund, indicating a complete absence of retirement savings. These statistics are not entirely surprising, considering that 46% of respondents admitted to struggling to meet basic monthly needs like food and rent,” says Mkhize.

Although healthcare expenses tend to escalate significantly in retirement, 62% of respondents were not contributing to a specific savings vehicle for post-retirement healthcare needs. Mkhize says given that 40% cited the inability to afford necessary medical treatments or long-term care in old age as a significant financial worry, this points to a significant gap in retirement planning that needs to be addressed. DM


Comments - Please in order to comment.

  • Jennifer D says:

    For years I invested money into a so called retirement annuity. I transferred my pension from previous companies into same. Every year on receiving an increase I increased my contribution. I never received any communication from Fedsure. Then, after demanding information and going to senior execs, I establish that what is in my fund is virtually nothing but the pension amount I had originally contributed. On questioning this, I was told that because I had increased the amount every year, they had paid everything to the consultant (I had no consultant – the guy who sold me the policy had died and I was talking to the call center). Ombudsman tells me I shouldn’t have increased the amount and too bad for me. Unethical and deceitful insurance companies in their luxury buildings have been taking advantage of consumers for years – and I have no pension .

    • Amanda Hayes says:

      Tell me about it. My RAF-based living annuity now pays me (at 4% draw) exactly R15 000 A YEAR.

    • Oliver Laubenheimer says:

      These comments are unfortunately echoing the publics ignorance surrounding basic investment skills and knowledge. how does one go even 1 year without asking for a statement of where you are paying your money ? if you are part of a company’s pension scheme, the HR dept MUST be able to offer statements. most investment houses have member portals where you can get this info yourself. consultant fees are regulated and published. I look at my own statement monthly and make decisions surrounding the investments on an ongoing basis. i also act as a gatekeeper/watchdog for my staff who have entrusted me with their retirement. I mail individual statements out to each staff member in January of every year, together with a synopsis of how the fund has performed. I have formed an internal committee (apart from the trustees) that sits quarterly to review performance. My advice to everyone is to take charge of your retirement. you have an obligation to yourself and much of its success depends on you being involved… one thing is clear, you cannot afford to not have a retirement plan.

  • Jim F. says:

    I started paying for a RA in my early 20’s – very modest sums until I emigrated in my late thirties and made the policies ‘paid up’. Getting close to retirement age I decided a couple of years back to investigate what I assumed were pretty worthless policies, since I will retire back in SA. To my surprise found that I had pretty close to 800k and switched out the policies into a single account with a low cost firm and growth will soon hit 1 million at present rate. Fortunately I will not depend on it for my pension, but paying in early definitely makes sense.

  • Carl Metelerkamp says:

    Don’t procrastinate about getting into an RA or if you are already on a company’s pension fund, you can voluntarily contribute more to it without having to take out a RA. The tax benefits for extra contributions are very good and far out-way a return on investment you would get using your taxed money invested elsewhere. You should be able to monitor the performance of your retirement savings online almost daily. Don’t waste your money on fancy cars, save for retirement instead 🙂 I am retired now, but sure, like everyone else, the rocketing prices are are real concern.

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