This month, South Africans received a stern warning about their personal financial future with the release of the 10X Investments South African Retirement Reality Report 2021 (RRR21), which highlights the grim reality of a huge savings deficit. -retirement among South Africans.
“Although it is well known that South Africa has a bad culture of savings, our fourth annual report showed how the pandemic of the past year and a half has pushed this culture to its worst level,” said Michael Rossouw, senior investment consultant at 10X Investments. .
The report – which is based on the results of the 2021 Brand Atlas survey, which tracks the lifestyles of the universe of 15 million economically active South Africans (those living in households with a monthly income of over 8 000 rand) – recognizes that many South Africans are simply unable to make ends meet, let alone put money aside for the future.
“The 10X retirement reality reports have documented a poor and deteriorating retirement savings record since 2018. This year, we have seen the economic impact of the pandemic worsen what was already a crisis,” Rossouw said.
He said an important lesson from RRR21 “is that we cannot just conclude that South Africans are choosing to live far beyond their means”.
“Rather, many people struggle to make ends meet. Even if they work and earn a salary, their income is often insufficient to match the cost of living.
The RRR21 recorded that 64% of people who said they did not save (up from 56% last year and 55% the previous year) said they simply could not afford to save because there was no nothing more at the end of the month. This is the case for all age groups and all demographic groups.
“People find the concept of putting money aside for a rainy day, or saving for a time when it is no longer possible to work, as far removed from their daily lives. If the struggle is to pay the bills, the notion of saving for the future simply cannot be a reality for a large cohort of people, ”says Rossouw.
For this reason, many respondents do not believe that they will ever be able to live the retirement experience. Barely 7% of people think they will be able to retire and live off their retirement savings.
“Most of the rest expect to keep working forever because that is the only way to support themselves,” Rossouw adds. “79% of those who save said they feared they would not have enough money to live on when they reached retirement age. “
Rossouw added that concerns were magnified regarding women: “Again, women’s knowledge of their retirement savings needs and the inability to implement the best possible solutions reveals a dire situation.
The RRR21 noted that women “need more but have less”. They need more because they live longer on average and have less for a number of reasons, including because they often earn less than men and tend to save less. According to the RRR21, 54% of women say they have no retirement savings, compared to 46% of men.
Rossouw said women are doing themselves a disservice by rejecting the best chance they have to increase their wealth, which is to invest in growth assets.
“Only 14% of women surveyed said they had invested their money for growth, compared to 24% of men. The number rises to 39% for men, based on those who both invest and save, compared to 24% for women.
A point which, according to Rossouw, sums up the conclusions of the RRR21 is the great discrepancy between the views of young people and the reality of the elderly interviewed: “A large number of people under 35 think they will be able to retire. before the age of 60; However, the majority of people over 50 have come to accept that they are unlikely to be able to retire before age 64, if at all. “
Read: South Africa‘s retirement expectations vs reality