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South Africans face the prospect of retiring at 80
Based on data from over 300 000 Sanlam Umbrella Fund members.
While 65 remains the official retirement age, most South Africans will need to work until 80 before they can afford to retire comfortably.
This is according to data from Sanlam Corporate, based on insights into its over 300 000 Sanlam Umbrella Fund members.
The company’s research highlights a growing retirement funding crisis, with estimates that only one in four South Africans will be able to retire at 65.
Sanlam Corporate CEO Kanyisa Mkhize is calling for urgent collaboration between corporates, financial institutions, and policymakers to ensure more South Africans can retire with dignity.
“Our internal member data indicates that while 65 remains the official retirement age, the majority of South Africans cannot afford to retire at this age. Most people will need to work an additional 15 years to achieve financial security in retirement.” says Mkhize.
“This gap between expectation and reality presents significant challenges for individuals, businesses, and the broader economy.”
Retirement savings falling short
Sanlam Corporate’s analysis found that the average South African is projected to achieve a replacement ratio of just 25% – far below the 75% benchmark required for a comfortable retirement.
The findings assume:
Investment returns of 9.25% per annum;
Inflation and salary growth of 5.25% per annum;
A 35-year savings term, as many South Africans enter permanent employment later in life; and
An average starting age of 30.
The impact of a later retirement age
The reality of retiring at 80 has significant implications for individuals, for businesses and for government.
Individuals will need to remain employable well into their 70s, requiring continuous skills development and health management, while employers must strike a balance between retaining older, experienced workers and creating opportunities for younger employees in a country battling high youth unemployment.
For government, South Africa’s social welfare system is under strain. The means test for old-age pensions disqualifies some retirees from state support, yet their savings remain insufficient for a secure retirement.
Solutions to close the gap
Mkhize suggests corporate interventions to help employees retire earlier, including automatic contribution escalations that increase savings alongside salary raises and enhanced employer matching programmes to accelerate retirement savings, and improved financial education and planning tools to help workers make informed decisions.
Read: Why your retirement fund might soon include cryptocurrency
“We have a responsibility to help South Africans retire with dignity, not decades past their prime,” Mkhize says.
“This is not just about individual savings behaviour – it’s about creating a sustainable system that works for all South Africans across generations.”
While the 80-year retirement age presents a tough reality, Mkhize believes it also offers an opportunity to rethink how South Africans approach work, savings, and retirement planning.
