Survey results | How South Africans perceive & plan for retirement

Cape Town - Sanlam’s latest survey found 60% of South Africans save for their wind-down years, however, just 37% are saving consistently. 34% of the 1 200 respondents said they see retirement as the time to start a second career. However, 24% believe they won’t be able to afford to stop working at all. Farzana Botha, Segment Manager at Sanlam Risk and Savings says the responses paint a diverse picture of people’s perception of the wind-down years.

“The staid view of retirement needs to shift to a ‘choose-your-own-adventure’, hyper-personalised path, where people actively define the life they want to live. There’s evidence of this kind of self-efficacy already emerging," says Botha. 

What South Africans care about

In the current South African context, retirement planning ranks as a low priority. “Young people especially are committed to empowering themselves through educational and entrepreneurial pursuits. Self-education such as a new certification, degree or diploma ranked as the top priority at 37%, especially for 25-34-year-olds. While black respondents comprised 54% of the total sample, they made up 68% of the participants that put education as their number one goal,” says Botha.

Entrepreneurship ranks second position. It was particularly prioritised by people who were younger, less affluent, black and male.

Botha believes that these priorities point to people’s emphasis on self-efficacy. Young people seem committed to upskilling themselves to ensure greater socio-economic access and opportunity. This is hugely positive in a nation where about 5 million young people are unemployed.

Being on track to retire comfortably took seventh place in a list of eight defined priorities. “For young people in particular, it’s just not a consideration right now, showing the vital need for retirement planning to be reframed to be more relevant," says Botha.

Keep working or wind down?

Of the sample, 51% of people said they fear not having enough income to afford the lifestyle they’re used to. Self-sufficiency stood out as a key goal with just 6% of respondents saying they’d be happy to live off the state or be dependent on their families.

“Interestingly, 46% of respondents want to retire at 61-70 years old, showing the traditional take on retirement remains entrenched, despite the dramatic increase in people’s expected lifespan,” says Botha. A quarter of respondents plan to live off their savings and retirement funds; these respondents tend to be older and have a higher income. 22% want to keep working for as long as possible – these tend to be people who are younger and less affluent, and presumably less sure about their ability to build sufficient savings to retire.

In terms of second careers, 34% of people indicated their intention to work part-time to supplement their wind-down years. “Only 25% see themselves stopping work completely. Those contemplating a second career were more likely to be 25-34 years old, suggesting upcoming generations are thinking about their wind down years differently," explains Botha.

How South Africans feel about their wind-down years

People were most excited (63%) by the prospect of having lots of time to be with loved ones. 43% of respondents were looking forward to starting new hobbies and passion projects, and 43% of people were energised by the prospect of travel and exploring. These aspirations were countered by people’s fears:

• 48% feared getting older and their health
• 34% were worried about not having enough purpose and activity in their days
• 31% feared losing loved ones and feeling alone

“We need to empower people to think about their wind-down years with excitement and confidence," says Botha. “Right now, if you browse for retirement icons online, you find stooped figurines with walkers, a person playing golf, or a yacht. It’s time for a radical reframing that speaks to more people!"

Are South Africans on track?

Many people are not on track – and they know it. Positively 67% of people said they’ve started financially preparing for their wind-down years, but 44% believe they’re not doing enough to make their goals a reality. Worryingly, 33% had not started planning at all.

In terms of saving for retirement, 45% of respondents used savings accounts, 39% saved through an employer’s pension fund, 12% had retirement annuities (RA) and 1% used other options like investments. People with pension funds and RAs tended to be older and more affluent. People relying on a savings account tended to be younger (18-34 years), black and less affluent.

There’s a significant opportunity to assist more people with understanding what savings goals to set and the roadmap required to reach these. Botha says professional financial advice is key. “South Africans know they need to save; they just need more resources and direction on how much to save and which vehicles to use."

The wind down years need to be radically reframed in a way that makes people excited for their future. “We need a new set of retirement icons – ones that speak to a world where your wind-down years are what you want them to be. People are living fulfilled lives of purpose for longer. We need to help them plan for that.  The greatest adventure awaits," concludes Botha.