Gen Z's Savings Crisis: Why Goals Collide With Reality for Young South Africans

Young South Africans know they should be saving. Almost all of them, 91% of working Gen Z respondents aged 18 to 29, understand the value of financial planning and have set savings goals for themselves, according to new research by Old Mutual released ahead of national savings month in July. Yet only 46% actually save regularly, a sharp 11-percentage-point drop from 2025. The gap between intention and action has never been wider.

The reasons are not hard to find. More than half of Gen Z savers, 56%, have dipped into their savings accounts just to cover everyday expenses, a jump of 10 percentage points from the previous year. Nearly a quarter, 22%, have taken out loans to pay for daily living costs. Financial stress among this age group has climbed to 36%, up from 29% in 2025. These are not the habits of people who are indifferent to their futures. They are the habits of people running out of options.

The pressure is sharpest for those carrying family obligations on both sides. Old Mutual’s research found that 43% of Gen Z workers belong to what researchers call the “sandwich generation,” supporting both younger and older family members while trying to build their own security. For them, the tension between long-term planning and immediate need is not abstract. It is the daily arithmetic of whose needs get met first.

Meanwhile, incomes are losing ground. The share of young workers earning more than they did a year ago fell to 51% in 2026, down from 55% in 2025. Building an emergency fund, a top-five financial priority among young South Africans, remains largely out of reach when wages cannot keep pace with rising costs.

John Manyike, group head of financial education at Old Mutual, pushed back against the familiar caricature of Gen Z as financially reckless. “Generation Z is often seen as financially impulsive, but our research reveals a more complex picture. Young South Africans understand why saving and planning matter. However, ongoing economic pressure is leading many to prioritise today’s needs over tomorrow’s goals,” he said.

The squeeze is not confined to younger workers. South African households across the income spectrum are making similar trade-offs. The national savings rate ticked up slightly to 14.9% of GDP in the first quarter of 2026, from 13.3% in the fourth quarter of 2025, but analysts expect that figure to fall again in the second quarter as living costs keep rising.

Frikkie van Loggerenberg, CEO of Ifsa Asset Managers, described the problem as both cultural and economic. “For South Africans in general, there is a bit of a lack of a savings culture. Everybody tries, but there’s not that 100% commitment to get to that point, and there’s not enough focus or commitment to retirement planning,” he told Business Day. “On the other hand, there is this economic pressure where things are getting more and more expensive each day, and people are battling. The income is battling to keep abreast with inflation.”

At the center of a separate but related debate sits the two-pot retirement system, introduced in September 2024 to allow workers limited access to their retirement savings during emergencies. By end-February 2026, the South African Revenue Service had approved R79.3 billion for withdrawal from savings pots, with 5.6 million people applying for tax directives. Supporters argue the system stops workers from resigning just to unlock their full retirement savings. Critics say it quietly hollows out the security those savings were meant to provide.

Van Loggerenberg is firmly in the second camp. “On the research that we’ve done, if you have access to that savings pot, each and every year you will use that up. It’s a fact of life, and you get into that routine to do it. So that makes a huge impact on your long-term retirement savings that the money is there for,” he said. “I don’t think it was a good decision. I think that retirement money should stay retirement money and you should not have access to that till the day that you actually retire.”

The long-term cost of these patterns is already visible. A 2023/24 retirement reality report by 10X Investments found that only about 6% of South Africans are on track to retire comfortably. The rest must either keep working or lean on their children, which means the sandwich generation of today may simply become the dependent parents of tomorrow.

Whether the two-pot system gets revisited, and whether wage growth can close the gap with inflation fast enough to matter, will go a long way toward determining which side of that 6% figure the current generation of young workers ends up on.