This important topic was discussed at a recent Financial Planning Summit hosted by Discovery Life.
The fact that people are generally living longer means that retirement savings will have to last longer.
The number of people living to 100 is increasing rapidly and is expected to grow from 451 000 in 2015 to 3 676 000 by 2050.
However, it was estimated in a recent survey that 30% of working South Africans have no formal retirement savings plan and this increases to 58% for those earning less than R5 000 per month.
Less than 10% of working South Africans, even those with a retirement savings plan, will be financially self- sufficient when they reach normal retirement.
35% of employed South Africans were likely to cash in their retirement savings during their working lives.
23% of working South Africans are part of the “sandwich generation” who support their adult children and their parents.
73% of those surveyed in a recent report on the subject said there was no alternative but to go into debt.
Discovery’s Chief Executive, Adrian Gore said that medical inflation will severely impact income in retirement. If medical inflation continues to run at say 9% per annum this will eat into retirement income projected to increase at only 5% per annum.