South Africa’s retirement savings crisis is deepening, with new findings showing that 90% of contributing retirement fund members assessed by Alexforbes are not on track to meet their retirement income targets.
The findings, reported by BusinessTech, reveal that many workers could face a significant drop in income when they retire, raising concerns about their ability to maintain their standard of living.
Retirement Savings Fall Short of Income Targets
According to Alexforbes’ Member Insights research, only 10% of contributing retirement fund members are on track to receive at least 75% of their final pensionable salary during retirement.
The average projected retirement income stands at just 46% of their final pensionable salary.
This means many workers could enter retirement with less than half the monthly income they previously earned.
The findings raise concerns about how retirees will manage everyday expenses without a regular salary.
R17 Billion Withdrawn Under Two-Pot Retirement System
The retirement savings challenge comes as South Africans continue accessing money through the two-pot retirement system.
According to BusinessTech, approximately R17 billion has been withdrawn from retirement funds administered by Alexforbes.
Although the system provides immediate financial relief, withdrawing savings early reduces the money available for retirement.
National Treasury introduced the system to allow limited access to retirement savings while protecting a portion for the future.
Delaying Retirement Could Improve Financial Security
The report also highlights the potential benefits of working longer.
With the average retirement age reported at approximately 61, delaying retirement until 65 could allow workers to build additional savings and improve their financial position.
However, working longer may not be an option for everyone.
For South African households already struggling with rising living costs, the findings highlight a troubling reality: decades of employment may no longer guarantee enough savings for a financially secure retirement.
