About 89% of those who participated in the FNB Retirement Insight Survey plan to continue working past retirement age due to a lack of sufficient retirement savings.
The survey, which focused on pre-retirement and post-retirement periods, also revealed that the majority of low-income earners are not confident that the retirement plans they have will deliver results due to financial constraints and age.
It has also been discovered that about 39% of respondents who don’t currently have a retirement plan in place intend to rely on alternative income sources for retirement such as selling assets, family support, or government social grants.
It also stresses that less than 10% of South Africans will be able to retire comfortably and that most high-income earners are confident about their retirement savings.
Having a side hustle is also another way that consumers can help boost their investment savings.
Product Head at FNB, Samukelo Zwane says, “People actually have not saved sufficiently for retirement so when they get to retirement, they realise that they actually have to continue working so that they can supplement their retirement income. So that stat actually speaks to that aspect with regards to retirement savings. The other key finding that we managed to get out of our retirement survey is that 76% of the people out there, actually have plans for retirement. So, they’ve got strategies that they have put in place in regards to retirement. However, they are not that confident about that because they do not have the right people actually that they are engaging around their retirement strategies.”
Better financial decisions
Those who are on retirement say they wish they had made better financial decisions about their retirement.
“Basically saying start early as you’ve mentioned. They want you to start around that. Educate yourself more when it comes to retirement. Seek advice, talk to retirement experts and all that and some of the reasons are personal. Some people say don’t have a lot of children, maybe it’s going to affect your retirement planning and others are saying actually have the right partner in retirement so that they can encourage you to do the right things when it comes to retirement and the other important fact is that they want you to actually diversify your income sources and not strictly rely on a salary,” adds Zwane.
External issues
Economists say that assets that are controlled by retirement funds have not grown that much since around 2015 and that the high unemployment rate has had a negative impact on retirement funds.
Exacerbating the problem is the high costs of living such as high interest rates and high inflation.
Senior Economist at FNB, Siphamandla Mkhwananzi says, “Whatever you save for those rainy days, retirement has to be able to cover your cost of living at that point in time. Now we know that high inflation does erode your purchasing power and your buying power. So that’s one aspect that your retirement fund will need to cover for later on in your retirement.”
The research also found that the respondents who are of retirement age only started saving for retirement at an average age of above 30 years old which is arguably late by industry benchmarks.
