Recently there have been important changes in the rates of retirement in South Africa. People are constantly asking questions of how much it will be enough to save to live satisfactorily after they reach the age of receiving a pension. Most South Africans usually try to save enough money to maintain the standard of living they are used to for the rest of their life. But considering this fact that everybody wants to live happily and carefree while they get old, recent news can sound a little confusing.

According to the data of the National Treasury, more than half of South Africans don’t have any kind of certain plans when it comes to their retirement. Specifically, 49% of them have not planned anything for their retirement and as statistics suggest, the women are far less prepared than men. In fact, 53% of South African women don’t have plans for retirement, which makes the situation even more dramatic. But the news isn’t surprising because last year’s statistics showed even lesser numbers, as only 6% of the country’s population had certain plans to retire comfortably in 2019. 

The annual Retirement Reality Report has been released by the 10X Investments on Wednesday and the experts believed that the situation would somehow change as a result of the coronavirus pandemic, which made it clear that it’s necessary to tackle the retirement savings during the crisis. However, the situation is different and even the look of how poverty looks like during the pandemic couldn’t convince South Africans to stop ignoring their future and start planning for retirement. 

Investment culture in SA

Experts are still trying to find out the possible reasons for having this kind of retirement planning rates in South Africa. The new report is based on the Brant Atlas Survey of 2020 which provides up-to-date information gathered using online surveys about the lifestyle of economically active South Africans who live in households and have a monthly income of more than R8000. Last year the number of people who reported that they don’t have a retirement plan was slightly less than this year, but the difference of 3% is not quite significant for making thorough decisions. 

Having just 49% of the people who have a retirement plan is surprising not only because of the pandemic situation and its accompanying long-term circumstances but also because of the popularity of investments in the country. Considering how large the investment culture is in South Africa, more people should have tried to save money for their retirement age but the actual situation is the opposite. 

People taking part in the investment process of South Africa rapidly grow annually and more and more people are making different kinds of investments, meaning that SA citizens usually think about it and practice investment. This is particularly the case with FX as SA is the most volume-heavy country on the African continent, leading many to believe that locals are fond of this industry. Some of the top regulated forex brokers in South Africa with a license are considered the top in the world as well. So it's very surprising as to where most of these investments go. The only logical conclusion is that most people lose money on the market rather than see some profits. Although there are a lot of successful people involved in this field, sometimes the investors can lose money as a result of the market crash and selling their positions instead of waiting for a rise. 

Possible reasons

There could be several reasons for the citizens of SA not to make arrangements for their retirement responsibly. First of all, there is simply not enough money that will be enough to live a decent life and save enough as well. If you want to save, you must have a minimum level of income but the economic situation in the country is not easy. People are experiencing financial stress and therefore, it’s hard to convince them to consider and spend time and energy about what their lives will look like years later. They don’t even know if they ever have the possibility to meet their goals so they can’t be sure that they can support themselves in retirement. 

But obviously, it’s not only about the income issue, because despite their income people are equally concerned about making some plans in retirement. This is why according to the report that it’s more a savings problem that comes from the widespread lack of retirement planning. As a result, it’s still not clear whether the situation changes for good because the population still faces the worsening crisis and their lifestyle is still in the process of changing because of the coronavirus pandemic. But if the economic situation improves, perhaps people will start to realize their vulnerability to life’s unexpected broadsides and believe that ignoring their future and retirement plans won’t be any good for them. 

As we can see in the news24 report, it’s certain that 15 million economically active SA citizens who earn more than R8000 in a month haven’t saved anything for retirement. Another reason for this kind of carelessness may be the fact that they don’t know how to save because no one can tell how much is enough. They don’t know how to achieve this unknown amount and live a decent life in the future. Everybody has different incomes and lifestyles which is why in the terms of rand, there is no correct answer to this question and it depends on how much you need right now to live comfortably. The problem is pretty hard to solve because you should keep in mind so many things like your retirement age, future inflation, your lifestyle while you are retired, and many more. However, 10X Investments tries to make the situation easy for their customers as it provides them with an online retirement saving calculator that allows users to modify their savings goal according to their retirement age and desired final income. 

So, hopefully, now you are aware of the importance of making plans for your future savings and following a reasonable investment strategy. If South Africans start optimizing their savings rate, fee levels, asset allocation, and personal savings, they will be protected from a much worse outcome.