89% of South Africans plan to work at least part-time after retirement as they lack enough savings to retire comfortably, with 40% saying they will have to sell assets and rely on family and social grants to maintain their lifestyle during retirement.
This is according to the inaugural FNB Retirement Insights Survey, the first of its kind by a financial services provider in South Africa.
FNB said that while South Africa does lack a savings culture, there are other reasons for the lack of retirement savings beyond apathy or a lack of income.
While 74% of respondents claim they have a plan to help them prepare for retirement, many are not confident that their plan will deliver the desired results.
Respondents point out barriers such as age and current financial constraints such as the high cost of living as reasons for not having enough retirement savings.
Nearly 10% of respondents simply said that retirement is too far in the future for it to be of concern to them.
According to the survey, an alarming 89% of those surveyed plan to continue working or work part-time due to a lack of retirement savings.
Moreover, 39% of respondents will rely on alternative income sources for retirement, such as selling assets, family support, or government social grants.
14% said that they would rely solely on government grants to retire.
In addition, it also established that the respondents of retirement age only started saving for retirement at an average age of 41, late by industry benchmarks.
“The findings highlight the need for South Africa to place retirement planning firmly on the national agenda,” said 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 plan for retirement.”
“We must also start to create a savings culture from the first day we start earning income.”
Encouragingly, the FNB survey found that 86% of respondents used 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 unlikely to maintain their current lifestyle in retirement.
Only affluent and wealthy respondents are likely to maintain their current lifestyles in 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 consistent with their current or preferred lifestyle.
“It is extremely concerning to see the statistics indicating that many respondents who have not planned for retirement may rely on social grants as part of their retirement.”