“While it is well known that South Africa has a poor savings culture, our fourth annual report has shown how the pandemic of the past year and a half has pushed that culture to its worst ever,” explains Rossouw.
The report – which is based on findings 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 more than R8,000) – acknowledges that very many South Africans are just not able to make ends meet, never mind put money aside for the future.
“10X’s Retirement Reality Reports have documented a poor and deteriorating record of saving for retirement since 2018. This year, we have seen the economic impact of the pandemic worsening what was already a crisis,” says Rossouw.
He said that an important lesson from the RRR21 “is that we cannot simply conclude that South Africans are choosing to live way beyond their means”.
“Rather, it’s a case of many people struggling to make ends meet. Even though they may be working and earning a salary, their income is often insufficient to match the cost of living.”
The RRR21 recorded that 64% of people who said they were not saving (up from 56% last year and 55% the year before) said they simply could not afford to save because there was nothing left at the end of the month. This is the case across all age groups and demographics.
“People are finding the concept of putting money away for a rainy day, or saving for a time when one won’t be able to work anymore, as very remote from their daily lives. If the struggle is to pay the bills, the notion of saving for the future just cannot be a reality for a large cohort of people,” says Rossouw.
Because of this, large numbers of the people surveyed do not believe that they will ever be able to experience retirement. A mere 7% of people believe they will be able to retire and live off their retirement savings.
“Most of the others expect to continue working forever because that is the only way they will be able to support themselves,” adds Rossouw. “79% of those who are saving said they were concerned that they would not have enough money to live on when they reached retirement age.”
Rossouw added that the concerns were amplified when it came to women: “Yet again, women’s knowledge of their retirement savings needs and failure 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 that they often earn less than men and they tend to save less. According to the RRR21, 54% of women say they don’t have a retirement savings plan, compared with 46% of men.
Rossouw said that women don’t do themselves any favours by rejecting the best chance they have of growing their wealth, which is to invest in growth assets.
“Only 14% of the women surveyed said they invested their money for growth, compared with 24% of men. The number increases to 39% for men, based on those who both invest and save, compared with 24% for women.”
A point that Rossouw said sums up the findings of the RRR21 is the big disconnect between the views of young people and the reality of older people surveyed: “Large numbers of people under the age of 35 believe that they will be able to retire before the age of 60; however, the majority of those over the age of 50 have come to accept that they are unlikely to be able to retire before the age of 64, if at all.”
Click here to download the full 2021 Retirement Reality Report.
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