Millions of South Africans abandon retirement plans to survive today's bills

SOUTH AFRICANS SQUEEZE RETIREMENT SAVINGS AS LIVING COSTS TIGHTEN

A worker trying to stretch a monthly salary across rent, food, and debt repayments is not unusual in South Africa right now. Rising living costs are forcing households across the country to abandon retirement planning in favor of paying today’s bills, deepening a savings crisis that has left workers dangerously unprepared for old age.

The numbers tell a stark story. Household savings have turned negative, with families spending more than they earn and relying on debt to cover the gap. In the third quarter of 2025, the household savings rate dropped to minus 1.2%, meaning South Africans are drawing down existing savings rather than building new ones. For those approaching retirement, the situation is particularly grim. Nearly three in ten people over 50 say their retirement plans are definitely or probably not on track, according to research by 10X Investments.

The broader national picture offers little reassurance. The South African Reserve Bank reported that the national saving rate, measured as gross saving relative to GDP, inched up only slightly to 14.9% in the first quarter of this year from 13.3% in the final quarter of 2025. Analysts expect that figure to weaken further as the Middle East conflict continues to drive up the cost of living and doing business across the economy.

Gerald Mwandiambira, a financial expert and former chief executive of the South African Savings Institute, sees the deterioration accelerating. “Given the financial stress that most South Africans are currently under, one can assume that the state of savings has actually deteriorated,” he said. The institute itself, founded in 2001 to promote a savings culture and long known for its annual Savings Month campaign each July, shut down about two years ago after losing funding and sponsorship.

The psychological barrier runs deep. Many South Africans believe they cannot save until they have eliminated debt entirely, a mindset that leaves them trapped. Mwandiambira challenges that assumption directly. “The unfortunate mindset is that most people believe they can only start saving when they have no debt. It shouldn’t be the case. We need to continue to encourage people to save and income can even be your government grant, there’s no such thing as earning too little to save,” he said.

High household debt levels reinforce the problem. A recent study by Debt Rescue found that nearly half of consumers would face severe financial pressure if interest rates rose further after the 25 basis point increase in May. That vulnerability leaves little room for retirement planning.

Only about 6% of South Africans are on track to retire comfortably, according to 10X Investments’ 2023-24 retirement reality report. Those who have managed to plan are not confident they can sustain themselves long-term given inflation and economic headwinds. To correct a retirement savings deficit after turning 50 requires setting aside 30% to 40% of monthly salary, a threshold most working South Africans simply cannot meet.

The government safety net offers minimal protection. The South African Social Security Agency provides a grant of R2,400 monthly for beneficiaries aged 60 to 74 and R2,420 for those 75 and older. For most retirees without private savings, this is survival money, not a retirement income.

Frikkie van Loggerenberg, chief executive of IFSA Asset Managers, describes the situation as urgent. “Savings month is a vital conversation for South Africa, but we cannot afford to stop at emergency savings. Every rand saved for a rainy day is important, but saving for retirement is saving for your future dignity. The statistics are sobering and the window to act is narrowing for millions of South Africans.”

By contrast, the households managing to save at all are doing so defensively, prioritizing emergency funds and debt reduction over long-term retirement planning, treating short-term financial stability as the only achievable goal. As living costs continue to rise and interest rates remain elevated, the question facing millions of ordinary South Africans is not whether they can retire comfortably, but whether they can retire at all.