Kobus Kunz – Head of Consulting, Efficient Benefit Consulting

In this last instalment of our comprehensive retirement series, we look at the harsh realities of the state of retirement planning in South Africa. What can you do today to ensure that you do not become a statistic?

A survey, conducted by Sanlam, one of the country’s largest financial service providers, was hosted on News24 and surveyed more than 5 205 participants across a range of demographics. The survey was part of Sanlam’s campaign titled LI: FE of Confidence aimed at financial education. The survey explored three major financial themes: retirement, savings, and receiving financial advice.

The findings are as follows:

• Overall, only 1% of all respondents had a retirement or pension fund.
• Of those who indicated that they are retired, only 2% said they felt “well prepared” financially for retirement. A further 14.7% felt “somewhat prepared”.
• Only 1% of respondents between ages 55 and 59 (approaching retirement age) have a retirement plan or pension fund.
• That number decreases as well in the final two age groups: Only 9% of respondents from 60-64, and 47.6% over 65, said they have a retirement plan or pension fund.
• Just 6% of those aged 25-29 have a retirement product, and it is lower for 18-24 at 10.4%.

The level of emphasis on retirement planning varies throughout different life stages. During youth, retirement planning only means setting aside enough funds for retirement. During mid-life, it might change to setting specific income/asset targets and taking the necessary steps to realize them. Once you reach retirement, decades of savings will pay out. You can start anytime to plan for retirement but it is always advisable to start planning for retirement as early as possible to ensure a safe and secure retirement.

Planning for retirement enables you to save enough money to maintain your current standard of living. It is about combining your various “pools of money” and blending them to make them last. If you are already retired or still employed, retirement planning is an opportunity for you to concentrate on how you want to spend your money in the future. Comprehensive retirement planning is crucial for you to retire comfortably in the future.

Only 6% of South Africans can retire comfortably. Not making sufficient provisions today will seriously impact your quality of life in the future. Therefore, it is very important that you partner with the experts to ensure that your retirement planning is done as comprehensively as possible. With the current economic instability, this is now even more needed than ever.

One of the most challenging aspects of creating a comprehensive retirement plan is striking a balance between realistic return expectations and a desired standard of living. The best solution is to focus on creating a flexible portfolio that can be updated regularly to reflect changing market conditions and retirement objectives and staying focused on staying invested even when markets are volatile.

ENDS

Catch up on the series – see below…