{"id":344726,"date":"2019-10-06T16:00:05","date_gmt":"2019-10-06T14:00:05","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=344726"},"modified":"2019-10-04T16:42:25","modified_gmt":"2019-10-04T14:42:25","slug":"while-black-tax-is-a-necessary-reality-its-not-sustainable","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/wealth\/344726\/while-black-tax-is-a-necessary-reality-its-not-sustainable\/","title":{"rendered":"While ‘black tax’ is a necessary reality, it\u2019s not sustainable"},"content":{"rendered":"

\u2018Black tax\u2019 \u2013 an individual and community approach intended to help previously disadvantaged South Africans financially sustain themselves \u2013 is proving to be a barrier to advancement for many working South Africans.<\/p>\n

10X Investments\u2019 latest Retirement Reality Report (RRR19) identified stark differences in people\u2019s financial situation across the various demographics in the country.<\/p>\n

The data confirms anecdotal evidence that a significantly higher proportion of South Africa\u2019s economically active black population continue to find themselves in a difficult financial predicament, with little chance of accumulating any savings, compared with other race groups.<\/p>\n

The added financial pressure of supporting older family members, such as parents and siblings, as well as one\u2019s own children is a characteristic of today\u2019s \u2018sandwich generation\u2019.<\/p>\n

The RRR19 shows that 79% of respondents in the Brand Atlas survey feel unsure about their financial situation or consider themselves to be doing badly financially, while 68% claim to have the additional financial burden of supporting family and friends.<\/p>\n

Mabetha Cedrick Pila, business development manager at 10X Investments, said a lack of financial education is costing many dearly, particularly as they struggle under the load of ‘black tax’.<\/p>\n

“The issue of \u2018black tax\u2019 can make it extremely difficult to save, compared with those who don\u2019t have to shoulder the financial responsibility of taking care of extended family members, such as parents and siblings, even grandparents and grandchildren.<\/p>\n

“Unfortunately, there isn\u2019t a special retirement savings avenue for people who are more financially burdened than others,” he said.<\/p>\n

\"\"<\/a><\/p>\n

The general rule of thumb is that working people should save 10-15% of their earnings towards retirement, but the RRR19 found that most South Africans were too financially constrained by their own and others\u2019 living expenses to save much, if anything, for their own retirement.<\/p>\n

“With many people struggling to pay their own bills, \u2018black tax\u2019 diminishes any chance they have of making regular contributions towards retirement.<\/p>\n

“Unfortunately, South Africans are constantly forced to prioritise immediate expenses over long-term investments,” Pila said.<\/p>\n

He pointed out that this leads to an almost inescapable cycle of dependency. He added that, without financial education, economically active South Africans will continue to find themselves in a financial dead-end, with little prospect of breaking this cycle.<\/p>\n

\"\"<\/a><\/p>\n

“In order to realise a dignified, secure retirement you have to find a way of saving money for the long term. If you reach the end of your working career with no savings to speak of, you will ultimately become the dependent. It\u2019s a cycle that gets perpetuated.\u201d<\/p>\n

\u201cThere is no guarantee that a support structure, such as the one you\u2019ve been providing to others, will exist for you when you retire. While ‘black tax’ is a necessary reality for so many people today, from a financial viewpoint, it\u2019s not sustainable and a barrier to prosperity for all concerned,” Pila warned.<\/p>\n

The RRR19 found that 72% of South Africans across all demographics were either doing badly financially or unsure of their predicament, 58% were struggling to afford their monthly living expenses, and 64% were supporting a variety dependents, many of them adults.<\/p>\n

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Regardless of class or race, an enduring culture of dependency and a lack of long-term planning is likely to result in increasing levels of poverty.<\/p>\n

\u201cAs tough as it is,\u201d said Pila, \u201cit\u2019s important to secure your future first by educating yourself and prioritising saving, and only then see how you can help your dependents secure theirs.”<\/p>\n

He added that breaking the cycle of dependency would likely involve some difficult conversations with family members, where everyone concerned would need to adjust and learn how to live within their means.<\/p>\n

\u201cTaking control of the situation for yourself means habitually investing whatever little you can in a retirement vehicle with above-inflation returns and low fees. Your future self and your family will thank you for it,\u201d Pila said.<\/p>\n<\/div>\n

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Read: Times are getting tougher for South Africans<\/a><\/strong><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

\u2018Black tax\u2019 \u2013 an individual and community approach intended to help previously disadvantaged South Africans financially sustain themselves \u2013 is proving to be a barrier to advancement for many working South Africans.\u00a0<\/p>\n","protected":false},"author":10,"featured_media":252277,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9880],"tags":[11953,26],"class_list":["post-344726","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-wealth","tag-10x-investments","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/344726","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=344726"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/344726\/revisions"}],"predecessor-version":[{"id":344732,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/344726\/revisions\/344732"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/252277"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=344726"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=344726"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=344726"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}