Edition: June / Aug 2017
The term pretty much sums up the state of too many South Africans’ provision
It hardly bears repetition that South Africans are spending more than they’re saving. The habit is ingrained. And it won’t moderate, let alone reverse, at least until government leaders set the example by switching their behaviour to displays of austerity.
The latest Sanlam survey focuses on the middle class, mainly respondents earning between R400 000 and R1m a year. Most of them have post-matric qualifications. Neither their earnings nor their education offer relief from financial stress (defined as “emotions associated with the difficulties that an individual or household may have in meeting financial commitments due to a shortage or misuse of money”).
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In fact, the survey finds that 73% of them experience financial stress. The survey being too polite to attack the propensity for debt-fuelled consumerism, it attributes the stress to such factors as obligations that range from support for members of an extended family to paying school and university fees, and not having sufficient for unexpected emergencies. As many as 42% admit that they’re simply unable to save for the future.
Their expectation, possibly forlorn, is that they’ll be able to work beyond retirement age. Where and at what remuneration in a low-growth economy? Or, probably inevitable, that they will reduce their living standards. By how much do they anticipate, given the compounding inflation of healthcare costs alone?
So we dream on. For a reality check, it could be useful if a future survey were to compare the pre-retirement expectations of respondents from say 10 years ago with the actual circumstances they ultimately confront in retirement.
Old Mutual surveyed 1 008 individuals, with matric and above, living in metropolitan areas and having full-time employment. It found:
There you have it in a nutshell. The unanswered questions are who’s going to do what about it.
Viresh Maharaj, of Sanlam Employee Benefits, looks to employers: “Workplace-based financial wellness programmes provide the opportunity for them to address the drivers of their employees’ financial stress at scale. Amongst our respondents, six out of 10 indicated that they would be interested in such programmes. Another two out of 10 were open to such initiatives. Respondents expressed an appetite for programmes that include access to financial advisors, financial-literacy training and budgeting tools.”
Many employers do try. The trick is not so much in getting horses to the water as in getting them to drink.