Half of South Africans plan to work beyond retirement – BusinessTech

Many South Africans under the age of 60 plan to work beyond retirement age, with many seeing retirement as a transition phase.

The 2024 FNB Retirement Insights Survey showed that the vast majority of South Africans are insufficiently prepared for retirement, mainly due to economic pressures and a lack of financial literacy.

For the report, a mix of quantitative surveys and face-to-face interviews were conducted with
1,072 respondents between 12 January and 2 February 2024.

Data from the survey showed that nearly 50% of respondents are not planning for retirement due to economic challenges, high immediate financial obligations, and the inability to save.

“This year’s study validates the ongoing financial and knowledge barriers that South Africans face, which impede effective retirement planning,” said Lytania Johnson, CEO of FNB Personal Segment.

“However, the responses also show a greater awareness of the importance of education in overcoming those challenges.”

“Despite a landscape fraught with economic instability and rising living costs, there is a growing awareness of the need for structured financial education and more accessible planning services.”

Sizwe Nxedlana, CEO of FNB Private Segment, added that retirement outcomes are highly dependent on one’s income group, with higher-income individuals generally reporting better preparedness for retirement.

Most South Africans struggle with savings and investment due to the current harsh economic conditions.

“The gap between retirement expectations and reality is also concerning, with many respondents anticipating maintaining their living standards despite inadequate provisioning, particularly among younger respondents,” said Johnson.

Despite the major challenges, the research also showed that several trends amongst individuals who have not reached retirement age (pre-retirees).

For instance, there was a broad consensus on the value of having multiple sources of income and taking a disciplined approach to financial management, in turn, leading to greater confidence and control over retirement funds.

This positive shift may already be happening, with roughly 75% of respondents who have an existing retirement plan feeling that they are on course for a good retirement.

That said, an increasing number of pre-retirees believe that they need to continue working after retirement age.

25% of respondents under 60 intend to work full-time after they reach retirement age, while another 25% plan to work part-time/reduce hours.

“The relatively high proportion of respondents who intend to continue working indicates that retirement is increasingly being seen as a transition phase rather than a complete withdrawal from the workforce,” said FNB.

Notably, when breaking down income brackets, those earning the most expect to work full-time.

76% of FNB wealth clients (over R150,000 per year)expect to work full-time when reaching retirement, while 24% expect to be working part-time. 0% of FNB Wealth clients in the survey expect to fully retire.

In contrast, only 13% of Entry Wallet clients (under R3,500 per month) expect to work full-time at retirement, while 33% expect to retire fully.

Notably, many South Africans over the age of 60 are still working.

38% of respondents over the age of 60 are still working full-time, while 30% said that they are earning a secondary income despite being retired.

7% are also working part-time.

Post-retirement also showed shifting mindsets, with many designers more increased control over financial matters once retired.

A growing portion of affluent retirees are also opting for living annuities to manage their retirement income.

Roughly 10% of respondents that fall into FNB’s emerging affluent, affluent & wealth segments bought a living annuity with 100% of their retirement benefit when retiring.

On the other hand, one in five retirees in these segments withdrew the permitted one-third of their retirement savings in cash when they retired. The remaining two-thirds were invested.

“Not only does this mean lower retirement income for the remainder of their lives, but if the one-third cash withdrawal amount was higher than the R500 000 tax-free withdrawal allowance, their tax liability could have significantly lowered the amount they received,” said FNB.