South Africa is staring down the barrel of a retirement crisis.

A new report by 10X Investments paints a grim picture of the country’s financial readiness, revealing that just 6% of South Africans are on track to retire comfortably. For millions, the dream of slowing down at 60 is slipping further out of reach.

R7.5 Million Needed by 63, But Few Will Reach It

According to 10X’s Retirement Reality Report, a South African needs about R7.5 million by age 63 to draw a pre-tax income of R25,000 per month in retirement, the minimum to maintain a middle-class lifestyle. This assumes a cautious 4% annual drawdown.

But the reality? Most South Africans are saving too little, too late.

“The shortfall is driven by poor saving habits during working years,” said Andre Tuck, Senior Investment Consultant at 10X.

Retirement Age Pushed to 80

It gets worse. Kanyisa Mkhize, CEO of Sanlam Corporate, says many South Africans will be forced to work well into their 70s or even 80s to survive financially.

“Our studies show that people expect to retire at 60. But in reality, they may need to work two decades longer,” she warned.

This disconnect between expectations and reality is exacerbated by poor access to financial advice. A 2025 Sanlam Benchmark study found that:

• 48% of respondents use Google for financial information

• Only 22% consult a professional advisor

Mkhize says without tailored advice, “people have unrealistic retirement age expectations — and disastrous financial outcomes.”

Two-Pot System: A Lifeline or a Trap?

The Two-Pot Retirement System, introduced in September 2024, was meant to help South Africans access short-term cash in emergencies. But it’s having unintended consequences.

According to the report:

• 36% of South Africans have already dipped into their retirement savings.

• Nearly 50% of job-changers cashed out their pensions entirely.

• 26% plan to seek advice only five years before retirement.

This is creating a perfect storm, draining retirement savings at a national scale.

SARS: Billions Collected, But At What Cost?

The South African Revenue Service (SARS) has benefited from the withdrawals — at least temporarily.

Commissioner Edward Kieswetter revealed that SARS expects R11–R16 billion in tax revenue from two-pot withdrawals, far more than the R5–R6 billion initially forecast.

Roughly 2.4 million South Africans have already withdrawn over R43 billion, according to Kieswetter. That’s nearly 40% of the total retirement fund contributors.

“It boosts short-term consumer spending and tax collection,” he said, “but this is a dangerous depletion of South Africa’s national savings pool.”

Real Cost of Early Withdrawals: A R1 Million Lesson

To show the long-term impact, Leone Hitge from asset manager Ninety One compared two investors saving R100,000 annually over 20 years with a return of CPI +5%:

• Investor A, who withdrew funds yearly, ended with R2.26 million.

• Investor B, who left the savings untouched, grew to R3.39 million.

“That’s a difference of over R1 million, or a third of the portfolio,” said Hitge.

And that’s before factoring in the tax penalties on early withdrawals, which eat further into the final savings pot.

What Needs to Change

The experts are clear South Africa must act now to avoid a full-blown retirement disaster:

• Financial literacy campaigns need urgent scaling.

• More South Africans must consult advisors — not Google.

• Early withdrawals should be the last resort, not the norm.

• Retirement education must begin long before age 60.

For now, the writing is on the wall: only the well-advised and well-prepared will be able to retire in peace. For everyone else, the finish line keeps moving, sometimes all the way to 80.

{Source: BusinessTech}

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