FINANCIAL FITNESS BY JESSIE TAYLOR
Saving for the future starts with retirement funds
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early half of all South Africans don’t have a retirement plan, leaving them at risk of a reduced income once they exit the workplace. It’s essential to plan for retirement, and one of the best ways to do this is through investing in a financial product such as a retirement annuity.
A LACK OF RETIREMENT SAVINGS AMONG SOUTH AFRICANS In 2020, the 10X South African Retirement Reality Report found that 49% of South Africans do not have a retirement plan. Of those that did have a retirement plan, three quarters were worried they would not have enough funds to live on after they had retired.
What this lack of savings translates to is that, on average, someone with retirement savings can expect to receive around a quarter of their income after retirement. Those forced to rely solely on the government’s older person’s grant (more than 3.6 million people) currently have an income of up to R2 000 every month.
The lack of retirement savings among South Africans is affected by many factors, among them a high unemployment rate and a strong culture of borrowing. And many South Africans simply do not have the extra income to set aside as savings, with at least 30% of the working population supporting family members in retirement.
This is not surprising, as around two-thirds of those contributing to a retirement fund have less than R50 000 in their funds.
This can have a shocking impact on the quality of life in your final years, leaving many retirees under financial pressure.
More than 55% of respondents in the 10X survey said they do not have enough money at the end of the month to save.
44 | Public Sector Leaders | May 2022
