South Africa’s Retirement Crisis: An Infographic

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Image of an infographic based on a Sanlam retirement planning survey for an article on moneysmart

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When it comes to the most important decisions you’ll ever need to make in your life, there’s perhaps no more important decision than choosing the right retirement savings option. 

Without adequate retirement planning, the majority of retirees will struggle to meet their monthly financial needs. This is why, when it comes to planning and saving for one’s retirement, earlier is certainly better.

A major concern in the retirement savings space however, is that people aren’t afforded enough time to make an informed and calculated decision as to which of their company’s retirement fund options to select.

This was brought to light recently when Sanlam released their annual BENCHMARK Survey.

Since 1981, the Sanlam survey has investigated the retirement savings industry with the aim of providing insight into this specific area of the finance sector.

The data gathered from the survey proved to be rather enlightening and so the Sanlam team made an informative infographic to depict their findings (see above). 

A vast majority of those included in the survey claimed that they were made to return their retirement planning forms within a week, whereas an alarming 19% of survey participants were allowed only a few hours to do so. 

Choosing the right retirement savings plan is a major decision and one that shouldn’t be entered into lightly by quickly filling in a form. It will have a significant impact on your future and whether or not you will be able to enjoy a financially secure retirement.

Furthermore, Sanlam’s spokesperson says that your retirement planning needs to be done within in the context of your individual financial circumstances. There is a wide range of retirement funds and what works for you may not necessarily work for someone else. Factors such as marital status and whether or not you have children will naturally affect your situation and which retirement planning vehicle is best suited to you.

It’s therefore recommended that you have a financial needs analysis done to guarantee that whatever retirement planning decision you make is the best one for you and your family.

To help out, Karin Muller, Head of Sanlam Growth Markets Solutions, outlined 5 key tips to help you make the right retirement planning decision:

1) Don’t let a new employer bully you into making a rushed decision.

Make sure you take the retirement forms home and review them properly before signing. 

2) Consult with an expert.

As with any major financial decision always speak to a trustworthy and knowledgeable financial advisor. Ask him or her to scrutinise the funds to help you figure out what to do. 

3) Seriously consider your two biggest choices:

What amount you will contribute and where you will invest the funds. Take your time as you weigh up the various options and check with your financial advisor before making any decision. 

4) Make sure you review your retirement fund after signing.

Don’t forget to check that your retirement planning solution is keeping up with your ever-changing life circumstances.  

5) If you change jobs, make sure you reinvest your retirement money.

Most of those surveyed in the BENCHMARK Survey who had used their retirement savings during their employment hadn’t reinvested them for retirement. This basically means that they needed to begin saving from scratch once re-employed.

SOURCE: Sanlam (http://www.sanlam.co.za/)

 

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About Author

Stefan de Klerk is Moneysmart's Product Manager. He has a passion for technology, consumer trends and anything new. With great research skills, he loves to dig deep into human behavior spending trends and the implications thereof.

  • Its ridiculous to think that you have to work for at least 40 – 50 years saving up for a retirement. And when you have to retire at age 65, you have like 20 years or less funds to live with at 30% less then your last paid salary. But even more worrying is, that you have to save at minimum 20% of your after tax salary which does not even raise above the true inflation mark and your pension funds hardly ever out perform inflation. So in actual fact you probably have like 50% earnings at retirement compared to your last pay check. Further, people live longer, up to the ages of 90 +, so we have a bigger problem, less time to work, to save retirement money that performs under inflation to outlive our pensions by at least 5 – 10 years before we die. Something has got to change, people need to start small businesses at a younger age that can generate them an income at retirement to supplement the loss of earnings once they retire.