A dire lack of savings among a majority of working South Africans is forcing them to consider working past the traditional retirement age, according to FNB’s inaugural Retirement Savings survey released on Wednesday.
The survey, which quizzed more than 1 000 respondents, revealed that most South Africans are not saving enough for retirement, not for a lack of interest, but a limited ability to put away money for the time they leave the workforce.
As much as 89% of South Africa’s working class polled in the survey said they expect to continue working past retirement in different forms, including full-time or for fewer hours.
Read/listen: ‘Put something away every month – and forget about it’
The survey segmented the respondents by income brackets and showed middle-income earners with an annual income of between R180 000 to R450 000 as the group most likely to continue working (64%), followed by affluent individuals (59%) who earn R450 000 to R850 000 per year.
Most expect to work
As many as 39% of mid-income earners and 42% of affluent individuals said they mostly expect to continue working on a full-time basis post-retirement age, while 25% and 18% respectively said they expect to work part-time.
About 44% of FNB’s entry wallet customers, earning R36 000 and less annually, expect to continue working post-retirement, with most (38%) seeing themselves retiring but taking up a side hustle.
A total of 31% of these earners expect to continue working but for reduced hours.
Although the survey found 74% of individuals under the age of 60 had a retirement plan in place, most displayed a lack of confidence in their plans, while those without plans cited financial constraints, such as the high cost of living and prioritising spending on groceries and transport, as the key barrier.
Alarming reliance on grants
Of these workers 39% said they are likely to rely on alternate sources of income for retirement, including selling assets, dependence on family support, or government social grants.
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The survey also found that most expect to maintain their current standard of living in retirement, especially among earners from the middle-income segment and above.
“However, there is a concern, particularly among middle-income participants, that their retirement savings may not be sufficient to support their desired lifestyle,” FNB said.
Lytania Johnson, FNB Personal Segment CEO, said it is alarming that a large proportion of respondents without a retirement plan are looking at social grants as an option.
“The challenges highlighted in the survey point to broader challenges with financial wellness, beyond retirement,” she said.
A person’s ability to manage their money today is crucial to their ability to afford a retirement that’s consistent with their current or preferred lifestyle.”
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