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South Africans Face Retirement at 80: Sanlam’s Call for Urgent Interventions

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According to Sanlam Corporate, the reality for most South Africans is that retirement at 80, not 65, is the true financial picture. After analyzing over 300,000 members of their Umbrella Fund, Sanlam revealed that only 25% of South Africans can afford to retire at the traditional age of 65. With most people needing an additional 15 years of work to reach financial security, this “retirement age gap” presents massive challenges for individuals, businesses, and the state.

The 80-Year Retirement Reality: A Wake-Up Call

Sanlam Corporate’s data highlights a staggering reality: the average South African can expect to achieve only a 25% replacement ratio of their salary by the age of 65, far below the 75% needed for a comfortable retirement. This significant gap in retirement savings means many South Africans will need to work until their late 70s or early 80s just to maintain a basic standard of living.

The company suggests that these findings underscore the need for urgent intervention from employers. By aligning retirement contributions with salary increases, offering enhanced financial advice, and improving access to retirement planning tools, employers can help close the gap.

The Impact on Individuals, Employers, and the State

For individuals, this extended working life brings with it the challenge of staying employable well into one’s 70s, balancing career development with health considerations. Sanlam’s data also shows that South Africa faces a delicate situation—an ageing workforce competing for jobs with one of the world’s youngest populations, where nearly 60% of South Africans are under 25.

This generational tension creates complex implications for businesses, as they must navigate the challenge of retaining older workers while providing opportunities for the younger generation. Employers, therefore, play a key role in offering solutions that benefit both groups, such as promoting training, offering flexible work schedules, and encouraging early retirement savings.

The state also faces difficulties in managing the intersection between the pension system and retirement savings. Many older citizens with preserved retirement funds may be disqualified from state support, despite their savings being insufficient for a secure retirement. This highlights the need for a balanced approach to retirement savings, one that accommodates both individual responsibility and state assistance.

Sanlam’s Proposed Solutions to the Retirement Age Gap

To bridge this growing gap, Kanyisa Mkhize, CEO of Sanlam Corporate, has proposed several key interventions aimed at ensuring South Africans can retire with dignity:

  1. Automatic Contribution Increases: Aligning contribution increases with annual salary increases helps boost retirement savings without affecting current lifestyles.
  2. Enhanced Employer-Matching Contributions: By expanding employer-matching thresholds, companies can encourage employees to save more for retirement while providing additional compensation through tax advantages.
  3. Access to Financial Advice: Making financial planning tools and professional advice available to all employees ensures they are better equipped to make informed decisions about their retirement.

Mkhize stresses that a coordinated effort is needed from all stakeholders—employers, employees, and the government—to address the fundamental shift in South Africa’s retirement planning landscape. Despite the daunting reality of an 80-year retirement age, there are opportunities for innovation in how work, savings, and retirement planning are approached across the country.

By taking action today, businesses can help secure a better financial future for South Africans, ensuring that retirement doesn’t become an unattainable dream for future generations.

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