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SA needs to put retirement planning firmly on national agenda

Ability to manage money today is crucial to afford retirement

We all have to save for retirement - and we must start at an early age to live comfortably when no longer working.
We all have to save for retirement - and we must start at an early age to live comfortably when no longer working.
Image: 123RF

“My worst fear is being 80 years old and poor.”

These are the words of legendary thespian John Kani during an interview on Cape Talk in June 2016.

He turned 80 last week.

Kani said he had to teach himself about financial management in order to make sound money decisions and ensure that he secures his future. Importantly, he revealed that his financial management was not based on want but need.

We all have to save for retirement – and we must start at an early age.

If your monthly budget is currently R23,000, how much do you think you will need to survive when you retire? Will you have enough money to live as comfortably as you are now?

A few months ago, FNB released its findings of its inaugural FNB Retirement Insights Survey which unveiled some reasons for disparities in retirement savings beyond apathy or income.

Sizwe Nxedlana, CEO of FNB Private Segment.
Sizwe Nxedlana, CEO of FNB Private Segment.
Image: Supplied

“According to the survey’s results, an alarming 89% of those surveyed plan to continue working or work part-time due to a lack of retirement savings. While 74% of respondents claim they have a plan in place to help them prepare for retirement; many of those, particularly those in lower-income brackets, are not confident that their plan will deliver the results they want due to barriers such as age and current financial constraints such as the high cost of living.

“This appears to be corroborated by the fact that 39% of respondents who don’t currently have a retirement plan in place will rely on alternative income sources for retirement, such as selling assets, family support or government social grants,” the financial institution said.

The bank’s CEO of private segment, Sizwe Nxedlana, said these findings highlighted the need for SA to put retirement planning “firmly on the national agenda”.

“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 retirement conversations and create a savings culture from the first day we start earning income, within the limitations of volatile economic conditions that continue to affect incomes. As a financial institution that advocates for advice-led financial services, retirement solutions are among our top priorities for customers, irrespective of how much income they earn,” said Nxedlana.

The institution said it was encouraging that 86% of respondents said they used bank savings accounts as part of their retirement planning and 45% said they had a retirement annuity.

Lytania Johnson, the CEO of FNB personal segment, said challenges highlighted in the survey point to broader challenges with financial wellness, beyond retirement.

Lytania Johnson, CEO of FNB Personal Segment.
Lytania Johnson, CEO of FNB Personal Segment.
Image: Supplied

“A person’s ability to manage their money today is crucial to their ability to afford a retirement that’s consistent with their current or preferred lifestyle. As a result, it is extremely concerning to see the statistics indicating that a large proportion of respondents who have not planned for retirement may rely on social grants as part of their retirement. As a financial institution, we believe we are better positioned to provide our customers with not only the right advice, but also the solutions they require for retirement planning.

“It is not enough to only offer retirement savings products; financial institutions must provide customers with holistic support to maximise their income for short-term and long-term goals. We’ve introduced several digitised solutions over the years to help more of our customers access personalised advice and solutions for an array of financial needs, including retirement goals.

“We continue to innovate because we recognise that each person’s journey is unique and so should our support,” Johnson said.


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