Here’s how many people can afford to retire in South Africa: study

Financial services group Just SA has published its retirement survey for 2022, showing an increasing number of South Africans are unsure if they can afford to retire at all.

The findings were based on a survey of respondents in March 2022, with the country’s demographic and race samples accounted for.

The data shows South Africans over 50 are not confident that they have enough retirement savings, with only two in five believing that their income will cover monthly expenses should they live to be 100. A third (34%) of people are ‘confident’ of their savings lasting through retirement, while only 11% say they are ‘really confident’.

Worryingly, when asked who they would turn to should their retirement money run out in the future, 57% expect to call on their children or grandchildren, with 42% looking to siblings or other family members.

And while external research shows that people need around twenty times their annual income for a sustainable retirement, the average respondent admits to having saved only ten times, with many having not even saved two times as much.

Unsurprisingly, then, the overwhelming majority (70%) also acknowledge that they will need to change their lifestyle if investment markets fall by more than 10%.

When South Africans were asked how they plan to get through retirement, the answers included:

• 57% of respondents plan to rely on children/grandchildren;
• 42% expect to rely on siblings or other family members;
• 27% plan to rely on the government;
• 14% plan to rely on friends;
• 10% don’t have a plan;
• 9% think their retirement funds will be enough.

Data published by Genesis Analytics and the Financial Sector Conduct Authority (FSCA) in April shows only 12% of the 3.6 million individuals in the retired age group received a form of income in 2020.

More than 90% of retirees are unable to maintain their standard of living prior to retirement and two-thirds of members have less than R50,000 in their retirement funds.

Since 2017, the average value of benefits paid out has slightly increased in real terms, averaging approximately R39,000 per month. The average contribution to pension funds has, however, remained relatively stable at around R900 per month in real terms.

In the public sector, 92% of workers have a retirement product, whereas only 50% and sometimes less have a retirement product in the private sector. Coverage, the proportion of individuals with a retirement product, is particularly low for individuals earning below R14,000 per month.

Many experts recommend using the 80% rule as a benchmark for what you will need to cover your monthly expenses once retired in South Africa.

If you currently earn R15,000 per month, and apply the 80% rule, you will need at least R12,000 per month after retirement to maintain your current living standard.

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Read: Financial services group Just SA has published its retirement survey for 2022, showing an increasing number of South Africans are unsure if they can afford to retire at all.