Only six percent of South Africans will retire comfortably - here’s how you can be one of them

People generally forget that when they retire, they will no longer be receiving a pay cheque, so they need to save enough money for retirement so they can live a comfortable life. Picture: Freepik

People generally forget that when they retire, they will no longer be receiving a pay cheque, so they need to save enough money for retirement so they can live a comfortable life. Picture: Freepik

Published Feb 26, 2024


Only 6% of the South Africa’s population are on track to retire comfortably, according to the sixth edition of the 10X Investments Retirement Reality Report 2023.

The report is based on the findings of the 2023 Brand Atlas Survey which tracks and measures the lifestyles of 15.4 million economically active South Africans – people living in households with a monthly income of more than R6,000, are 16 or older and they have internet access through online completion surveys.

Findings of the report showed that the majority of South Africans have not formally planned for retirement, and of those who have planned, are not confident that they are on track to be able to support themselves for the long-term, considering inflationary pressures and the economic climate.

Tobie van Heerden, Chief Executive Officer for 10X Investments said: “The difference between what South Africans expect their retirement to look like and the realities faced by those in retirement and approaching it, cannot be underestimated.”

South Africans need to be better informed on the importance of saving, the power of compound interest, the consequences of not saving, the additional disadvantages that women need to overcome, and the impact of costs.

Planning for retirement

About half of respondents who had a retirement plan indicated that their plans were probably or definitely on track.

Twenty-nine percent of people over 50 indicated that their plans were definitely not or probably not on track.

Respondents whose plans were not on track or don’t have have a retirement at all, said that they were not able to sort out their retirement savings because they cannot afford to save.

Of the respondents who do have a retirement plan, only 37% could give a definitive answer on the costs, as an annual percentage of assets, of their retirement investments.

Another 37% had no idea what the costs on their investments were, while 13% believed that the fee depended on performance and another 13% believed they were not being charged at all.

The report found that 56% of working people that changed jobs admitted to cashing in their retirement savings.

Women’s financial health

Forty-nine percent of all women respondents to the survey indicated that they do not have a retirement plan, compared with 43% of men. More than double the number of men (11%) than women (5%) said they were diligently following a well-conceived retirement plan.

Women tend to save more than men (30% of women versus 26% of men), while men tend to invest more (24% of men versus 14% of women).

The report showed that the prudent, cautious approach women have to investing may ultimately be to their detriment, as only higher-risk investments, such as listed equities, can deliver inflation-beating growth over the long-term.

Retiring on your own terms

In 2021, the report showed that 70% were able to retire on their own terms. This figure dropped to 60% for 2023.

Van Heerden said: “This trend reflects the challenging economic times we are living in, indicating a rise in employers compelling their older workers to take early-retirement packages.”

Thirty-five percent of the retirees who had saved for retirement indicated that they were fairly or very confident that their savings would last, while 25% of retirees indicated that they had already run out of savings, meaning they were relying either on family or State support.

Saving for retirement

People often forget about their financial future, including what happens when they reach the age of retirement and are no longer receiving a pay cheque.

With advancements in medicine, people are living longer, which means that they need to have enough money saved up for retirement.

Some things you should keep in mind when saving for retirement:

– Start saving for retirement and start as early as possible, even if it is a small amount every month.

– When changing or quitting a job, people should transfer the money saved in their company retirement fund to a preservation fund or retirement annuity, where it can continue to grow.

– Speak to a financial adviser so they can ensure that your investment portfolio in your retirement fund or savings matches your risk profile.

– Don’t draw from your retirement fund too early, because the longer you delay drawing an income from your retirement savings, the greater your chances of being able to cover your expenses when you retire.

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