Retirement wake-up call for South Africans

While many South Africans believe they can stop saving after retirement, this is not always the case, and saving must become a lifelong endeavour.

This is according to Nedbank’s Executive of Segment Strategy and New Business Development, Bridget Nkandu, who said senior South Africans should never stop saving.

“Many hardworking South Africans see retirement as the finish line. A time when you can finally relax after decades of employment,” she said.

“Unfortunately, the financial reality for most people who reach this stage is very different from the dream.”

Nedbank’s research has shown that a staggering 90% of South Africans have not saved enough to retire comfortably.

“That is why it’s so important to keep saving for retirement right up to the day you can finally turn off the alarm clock,” she said. 

“In fact, since you’re no longer earning a steady salary once you retire, it’s a good idea to continue that saving habit right through your retirement years, too – just to make sure your money keeps on working hard for you, even when you’re no longer working to earn it.”

Nkandu explained that one of the main reasons senior South Africans – people 55 and older – need to continue saving and make it even more of a priority is that people today are living longer than ever before. 

Improved healthcare and better living conditions mean that many people can now expect to live well into their 80s and beyond. 

“While longevity is something to celebrate, especially if you’re healthy enough to make the most of your golden years, your money needs to last longer,” she said.

Another reason ongoing savings are critical is inflation – even if retirement brings an end to your working life, it does not halt the rising costs of goods and services. 

“Inflation erodes the value of money over time, meaning that the savings you have today will not cover as much 10 or 20 years into your retirement,” she said. 

“For seniors, this becomes especially relevant as healthcare costs, often the largest expense in later years, tend to rise faster than general inflation.” 

She said medical aid contributions, treatments and related expenses can quickly consume a big portion of someone’s retirement income. 

Therefore, seniors can protect themselves against inflation’s financial pressures by continuing to save and invest in inflation-beating assets and solutions.

In addition, Nkandu said unexpected expenses do not simply disappear once you retire. 

“Life is unpredictable, and unplanned financial emergencies like home repairs, car and appliance breakdowns, sudden medical expenses, or even helping family members in need can put pressure on your finances if you haven’t prepared for them,” she said.

“Without enough savings, emergencies can derail even the most well-thought-out financial plan. As a senior, having extra money set aside for these surprises is crucial.”

Lastly, Nkandu pointed to the issue of debt – one of the biggest challenges many people face, and that has the potential to be a significant burden on retirement finances. 

In South Africa, around 67% of most people’s monthly income is used to pay off debt, leaving many with limited disposable income. 

“This makes it even more critical to prioritise saving as you approach retirement,” Nkandu said.

She advised South Africans to speak to a financial advisor to develop a plan that can free them of debt before they enter retirement.

“For all these reasons, if you’re a senior, your last few pre-retirement years should be the time to make that final push to maximise your savings,” she said.

“It’s not enough to simply set money aside; you need to make sure that your money is working as hard as possible for you, while also staying protected from the risk of market declines.” 

She recommended safe, income-generating investment options like fixed deposits, which are key to balancing risk and return. 

“Fixed-deposit accounts are also very useful for retirees. You can choose to have the interest from your investment capital paid out into your bank account, which is a great way to supplement your income in retirement,” she said.

“Many people think that financial planning and committed saving are meant only for certain stages of life. However, getting older, or even retiring, should never mean the end of saving.” 

“In fact, saving is more important than ever at that time in your life. If you’re 55 or older, continuing to build and manage your savings is crucial for ensuring peace of mind and financial stability for all your years to come.”