Guiding consumers since 2009

South Africans are starting to save

By Staff Writer

According to the latest report released by Old Mutual Savings Monitor, South Africans are finally starting to show signs of saving more and improving their future planning.

The report was released on Tuesday and indicated that the South African economy was on the slow road to recovery but South Africans are still saving too little.

"National budgets were under heavy pressure worldwide  and people will have to accept that governments will not be able to lend much support during their retirement years," said Rian le Roux, Old Mutual Investment Group economist.

Further strain was put on retirement savings by poorly performing markets, early retirement and low savings, which showed that many people were inadequately provided for.

"Their savings efforts will have to treble or quadruple in the effort to put sufficient money aside for retirement to avoid becoming a burden on the state or on their grandchildren."

Lynette Nicholson, head of research at Old Mutual, noted that people who planned ahead, even if they had debt, were managing to service debt better and save more, compared with those who did not plan.

"Improving understanding of the importance of money management and long-term planning is crucial to fostering a positive savings culture," she said.

More than 20% of South Africans fall into the "sandwich generation" which supports both their children and their parents.

"The sandwich generation is the generation of people squeezed between their own children and their ageing parents, and supporting both of them," Old Mutual said.

This is much higher than first world economies like the USA and Canada, where around 14% carry this burden, with the UK coming in at 10% and Japan 6%.

In 1990, less than 33% of young adults aged 18 to 24 years lived with their parents and the study by Old Mutual showed that currently, almost 70% of South Africans aged 18 to 24 live at home.

"The figure for those aged 25 to 34 is a staggering 45%."

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