Advertise Here
Icon

Directory

IconAlternative Investments
IconAsset Managers
IconAssociations and Institutes
IconBBBEE Consulting and Verification Agencies
IconConsumer Protection
IconCorporate Governance
IconCredit Bureaus
IconFinancial Planners
IconInvestment Consulting
IconLinked Investment Service Providers
IconListed Equities
IconOmbud
IconOnline Share Trading
IconParticipation Bond Managers
IconProperty Unit Trusts
IconPublications
IconRegulatory Authorities
IconStock Exchange
IconUnit Trust Fund Managers
IconWellness Programs
Advertise Here
  Subscribe To »

Retirement is a Reality, not a Choice

Published

2020

Mon

26

Oct

The annual 10X Investments’ Retirement Reality Report (RRR20), released last week, is one of the most significant surveys published in a long time. It is of specific importance to financial advisers who face the difficult task of having to convince clients to prepare for the inevitable.

Earlier this year, the Old Mutual Savings & Investment Monitor showed that a staggering 58% of South African households are facing high or overwhelming financial stress as the Covid-19 crisis knocks savings and raises debt levels. The just-released survey data also draws attention to the long running retirement saving crisis and helps to foster a better understanding of how existing vulnerabilities have been magnified by the global pandemic.

Like last year, just 6% of respondents in the new RRR20 felt comfortable with their retirement prospects, yet most seem to think their savings shortfalls will follow the novel coronavirus and, in the words on Donald Trump, “disappear … like a miracle”. It is therefore hoped that the RRR20 will broaden the discussion on the steps needed to improve the situation that continues to be downplayed by some and ignored by the majority.

What did the 2020 survey reveal about retirement planning?
 

49% of people surveyed say they don’t have a retirement plan (2019: 46% /2018: 41%)

The number of South Africans who feel good or pretty good about their retirement plan remains very low at 30% (2019: 33% / 2018: 38%))

69% (2019: 67%/ 2018:62%) of people surveyed said they had no retirement plan at all, or just a vague idea.

An alarming finding is that a large proportion of South Africans, almost 50%, believe they can set themselves up for a decent retirement in a relatively short time and believe it can be achieved by saving for 30 years or less.

Are those that do have a plan on track?

Although 75% (2019: 72%) were worried about whether they will have enough to live on after they retire or feel unsure about this, 67% of respondents said they expected to be able to preserve their standard of living in retirement. The inconsistency between these two figures indicates the widespread confusion about what is required to preserve one’s lifestyle in retirement.

Furthermore, most survey respondents (77%) believe they will have to generate some income after they retire and only 6% of respondents believe they are on track.

How are retirement experienced and seen by different age groups?

“One thing that these Retirement Reality Reports make more clear every year is that one of the biggest problems around retirement planning, or the lack of it, is unrealistic expectations,” according to the report. The research results suggest that retirement planning for most people is “a nebulous, even fantastical thing, a problem for another time”.

Whereas some 40% of respondents under 35 believe that retiring below age 60 is achievable, only 9% of over 50s believe they can retire before age 60.

Amongst the younger group (between ages 25 and 49), on average, only 37% expect to work past the age of 64, among those 50 years and older, more than twice as many (69%) have wised up to their retirement reality and plan to retire at age 65 or older.

“The lack of proper retirement savings is rooted in the widespread lack of retirement planning, which in turn manifests hubris and unrealistic expectations, financial ignorance and ill-discipline, and disengagement from the funding process” – states one of the conclusions of the report. This is where the role of the financial adviser cannot be over-emphasised.

The survey reveals a substantial number of opportunities for financial advisers. We will focus on some of these, including changing perceptions over time, the importance of retirement planning specifically for women, and the needs of those who have already retired. We will be covering these in more detail next week, but suggest you study this 19-page document to assist you in helping your clients help themselves.

 
Source: Moonstone Investment Indicators 26 October 2020
 
« Back to previous page Print this page » |
 

Breaking News »

One crisis invariably leads to a crisis of another kind

The Covid-19 pandemic is unquestionably a health crisis. That said, just focussing on the health aspects of the virus is too narrow a perspective. If we reflect back to the most recent global crisis - ...
Read More »

  

Debt is a four letter

Debt is something most people find themselves incurring. And it is not difficult to understand how one gets into debt. We have such easy access to credit cards; retail accounts for furniture, clothing, appliances; ...
Read More »

  

Making a case for offshore investing

State capture, corruption, land expropriation without compensation. These are all terms that have become part of the South African lexicon and part of our daily reality. According to the recent 2020 Bloomberg ...
Read More »

  

Just thinking long term is not enough

Along with many others, we often emphasise the importance of not giving in to your emotions and avoiding making rash, short-term decisions. Yet despite this, plenty of investors still fall prey to their emotions ...
Read More »

 

More News »

Image

Healthcare »

Image

Life »

Image

Retirement »

Image

Short-term »

Advertise Here
Advertise Here

From The Glossary »

Icon

Loss Development:

The difference between the estimated amount of loss(es) as initially reported to the insurer and the amount of an evaluation at a later date or the amount paid in the final settlement(s).
More Definitions »

 

Advertise

 

eZine

 

Contact IG

 

Media Pack

 

RSS Feeds

By using this website you agree to the Terms of Use.
Copyright © Insurance Gateway (Pty) Ltd 2004 - 2020. All Rights Reserved.