South Africa’s shocking retirement figures

South Africans do not believe that they are on track to retire comfortably.

According to the latest 10X Investments Retirement Reality Report 2023, which uses findings of the 2023 Brand Atlas Survey that tracks the lifestyles of 15.4 million economically active South Africans, only 6% of South Africans are on track to retire comfortably.

The survey showed that there has been minimal change in South Africans’ inclination to plan for retirement.

The report shows that the majority of South Africans have not formally planned for retirement, and those who have planned are not confident that they will be able to support themselves in the long term due to inflationary pressures and the economic climate.

Looking more positively, Tobie van Heerden, Chief Executive Officer for 10X Investments, said that in comparison to 2022’s survey, the 2023/24 report saw an increase in the number of people acknowledging the importance of having a retirement plan.

“The difference between what South Africans expect their retirement to look like and the realities
faced by those in retirement and approaching it, cannot be underestimated,” said van Heerden.

“Knowledge and information are key to closing the expectation-reality gap – in their long-term interests, South Africans need to be better informed on the importance of saving, the power of compound interest, the consequences of not saving, the additional disadvantages that women need to overcome, and the impact of costs.”

Crunching the numbers

About half of the respondents who had a retirement plan in the survey said that their plans were “probably” or “definitely” on track, with variations by age.

Remarkably, 29% of people over 50 said that were “definitely not” or “probably not” on track. This is a problem as it is extremely difficult to correct any deficit in savings after reaching 50, as it requires at least 30% to 40% of a monthly salary to be invested into retirement savings to retire comfortably.

72% of those whose plans were not on track said that they “I am not able to save enough” as a reason, which 10X links to not having a retirement plan in the first place.

70% of respondents without a retirement plan agreed with the statement: “I cannot afford to save, I have
nothing left over at the end of the month”.

“Year after year, we are seeing a large proportion of respondents that have been partially or strongly of the view that they will need to continue earning a living after their formal retirement date,” Van Heerden said.

For those who lacked a retirement plan, just 37% could give a definitive answer on the costs, as a percentage of assets, of their retirement investments.

Another 37% had no idea what their investments cost, while 13% said that they believed that the fee hinged on performance, and another 13% believed they were not being charged at all.

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