A lack of retirement savings will lead to at least 8 out of 10 surveyed South Africans planning to continue to work, past their retirement age. This has been revealed during a FNB Retirement Survey. The research also found that of those without a retirement plan, at least 4 out of 10 will rely on selling assets or government social grants.

Lack of retirement savings

NB has announced the findings of its inaugural FNB Retirement Insights Survey, the first retirement research of its kind conducted by an integrated financial services provider in South Africa. Against the backdrop of the widespread belief that South Africa lacks a savings culture, the survey unveils some reasons for disparities in retirement savings beyond apathy or income. One of the survey’s distinguishing factors is its segmented approach, which results in a comprehensive understanding of financial well-being and retirement readiness across various income groups.

People working past retirement

According to the survey’s results, an alarming 89% of those surveyed plan to continue working or work part-time due to a lack of retirement savings. While 74% of respondents claim they have a plan in place to help them prepare for retirement, many of those, particularly those 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 constraints such as the high 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.

“The findings highlight the need for South Africa to place retirement planning firmly on the national agenda,” says Sizwe Nxedlana, CEO of FNB Private Segment.

“While our country continues to implement structural reforms to improve access to retirement savings and prevent potential abuse of retirement funds, there is an urgent need to provide consumers with accessible solutions and education to help them better retirement plans. We must also start retirement conversations and create a savings culture from the first day we start earning income, within the limitations of volatile economic conditions that continue to affect incomes. As a financial institution that advocates for advice-led financial services, retirement solutions are among our top priorities for customers, irrespective of how much income they earn.”

Using bank saving accounts

Encouragingly, the FNB survey found that 86% of respondents said they use bank savings accounts as part of their retirement planning, and 45% said 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.

Financial wellness, beyond retirement

Lytania Johnson, CEO of FNB Personal Segment, believes that “the challenges highlighted in the survey point to broader challenges with financial wellness, beyond retirement. 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.”

She says, “As a result, it is extremely concerning to see the statistics indicating that a large proportion of respondents who have not planned for retirement may rely on social grants as part of their retirement.”

“It is not enough to only offer retirement savings products; financial institutions must provide customers with holistic support to maximise their income for short-term and long-term goals.”

*** THIS ARTICLE WAS WRITTEN BY FNB PR Manager, Dineo Molaba. ***