Most South Africans are struggling to put extra cash aside for the future as they face uncertain unemployment and higher costs of living according to Sanlam’s 2012 Benchmark Survey. “In the face of a challenging financial environment, most South Africans are not where they thought they’d be financially and struggling to earn enough money to set aside funds for the future,” says Victor Kambule, regional manager of Sanlam employee benefits. “However, in the face of numerous challenges, there are some rare ‘savings heroes’ who are forgoing instant gratification in favour of long-term gain.”
It was found that among employees earning less than R10, 000 per month, any savings put aside rarely last more than six months due to financial difficulties. The main reason respondents cashed in their retirement policies early was to settle short term debt (36%), followed by paying the mortgage (29%), paying for home renovations (29%) and to cater to living expenses (24%).
Researchers interviewed retirees from across the financial spectrum and asked them for their advice on how the youth should prepare for their retirement. They came up with four major guiding principles:
1. Start saving as early as possible. However small, put something aside when you can and leave it alone for as long as you can.
2. Limit the amount of debt you take on. Debit is a slippery slope and it can be a crippling financial burden if you spend beyond your means.
3. Take retirement seriously. Don’t wait to get advice from an accredited financial advisor. According to the survey, 65% of retirees receive retirement advice only 15 years before retirement.
4. Prioritise health and medical care when saving for retirement. Without your health, you have nothing. The majority (65%) of retirees use state medical facilities to deal with a shortfall in medical aid contributions.
Retirees pass on financial tips to SA youth
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