New data from FNB showed that an alarming amount of South Africans plan to work past retirement age due to a lack of retirement savings.
FNB Retirement Insights Survey gathered viewpoints from roughly 1,000 respondents between 13 January to 23 February 2023 with the aim of uncovering customers’ perceived preparedness for retirement.
The bank found that 89% of those surveyed plan to continue working or work part-time due to a lack of retirement savings.
Bheki Mkhize, the CEO of FNB Wealth and Investments, said: “Gone are the days of a smooth runway leading to retirement, where a single job provided a pension fund until age 65 and a guaranteed income for life.”
The bank reported that 44% of lower-income respondents anticipate continuing to work, while a significant percentage of middle-income and affluent participants, 64% and 59%, respectively, expect to continue working either full-time or on reduced hours.
The graph below shows who expects to continue working:
FNB reported that 74% of respondents claim they have a plan in place to help them prepare for retirement. 45% of respondents said that they have a retirement annuity.
“Despite this, the findings show that respondents in the entry-level, middle-income, and emerging affluent categories are highly unlikely to maintain their current lifestyle in retirement.”
“Only respondents who are affluent and wealthy are likely to maintain their current lifestyles in retirement. In addition, it also established that the respondents who are of retirement age only started saving for retirement at an average age that is above 30 years, arguably late by industry benchmarks,” said FNB.
According to FNB, those currently aged between 18 and 25 believe that they will start to save for retirement at 36 – marking an even later start.
Respondents in lower-income brackets are not confident that their plan will deliver the results they want due to barriers such as age and current financial strains such as the heightened cost of living.
“This appears to be corroborated by the fact that 39% of respondents who don’t currently have a retirement plan in place will rely on alternative income sources for retirement, such as selling assets, family support, or government social grants,” said FNB.
Sizwe Nxedlana, the CEO of FNB Private Segment, said that consumers need better education to help them save better for retirement and for there to be a better savings culture in South Africa, even in light of volatile economic conditions.
Lytania Johnson, CEO of FNB Personal Segment, said it was concerning that statistics point to a large portion of respondents who have not planned for retirement, saying that they may rely on social grants as part of their retirement.