Nearly 50% of South Africans are not planning for their retirement, primarily due to economic pressures and a lack of financial literacy.
These are the key findings of the 2024 FNB Retirement Insights Survey, which highlights persistent challenges around retirement in South Africa. Many less affluent individuals are struggling to save due to harsh economic realities.
Now in its second year, this in-depth research highlights the persistent challenges surrounding retirement in South Africa while also uncovering emerging opportunities that could shape the future of retirement preparedness in the country.
The survey also revealed that an increasing number of pre-retirees believe they will need to continue working even after reaching retirement age.
While many plan to seek part-time work, a concerning 50% of respondents indicated they intend to continue working full-time.
The survey showed that 38% of respondents over the age of 60 are still working full-time, while 30% said that they are earning a secondary income despite being retired. And, 7% are also working part-time.
Economic challenges, high immediate financial obligations, and an inability to save are significant barriers.
The findings underscore a critical gap between the need for financial survival and the importance of long-term financial planning.
The research did highlight several positive trends in retirement planning and preparedness for both pre-retirees and post-retirees.
Pre-Retirees:
Multiple Income Sources: There is broad consensus on the value of having multiple sources of income and disciplined financial management. Approximately 75% of respondents with a retirement plan feel confident and in control of their retirement futures.
Continued Employment: Around 50% of pre-retirees plan to supplement their retirement income with full- or part-time work, indicating a shift towards viewing retirement as a transition phase rather than complete withdrawal from the workforce.
Diversified Income Streams: A growing recognition of the importance of diversified income streams and financial discipline is evident across most pre-retiree groups.
Post-Retirees:
Control Over Finances: Post-retirement responses show a growing desire for greater control over financial matters, with many affluent retirees opting for living annuities to manage their retirement income.
Living Annuities vs. Cash Withdrawals: Only around 10% of respondents in FNB’s emerging affluent, affluent, and wealth segments purchased a living annuity with 100% of their retirement benefit upon retiring.
Conversely, one in five retirees withdrew the permitted one-third of their retirement savings in cash, potentially reducing their retirement income and increasing their tax liability if the withdrawal exceeded the R500,000 tax-free allowance.
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