South Africa's aging index has increased from 30 in 2017 to 33 today, which signals a steady upward trend towards a more senior population in the country.

Approximately 8 million South Africans aged 55 and older are either already enjoying their golden years or are approaching retirement. However, startling statistics from the 2023 Nedfin Health Monitor reveal that 90% of South Africans have inadequate savings for retirement, and a significant 67% of people in the country have no retirement savings beyond what they are putting into their employer-provided pension funds – which is often too little to be able to retire comfortably.

It's no surprise then that many people feel overwhelmed by anxiety, with prevailing sentiments suggesting that most worry it might be too late to correct their financial trajectory.

A recent Nedbank webinar provided insights into how effective retirement planning can be implemented by South Africans at all stages of their careers, with several Nedbank financial experts shedding light on the pressing challenges facing both young people and senior citizens as they navigate the often challenging and complicated road to retirement.

Nedbank executive for financial wellness Frank Magwegwe said what all the panellists agreed should be the number one priority for anyone wanting to save successfully for retirement, namely seeking professional guidance.

“Ask any high-performing sports star how they achieved the success they have, and one of the keys will almost always be that they have benefitted from an expert coach who shares their passion, and achieving financial success is just the same - when you have someone with expertise on your side, they can illuminate the financial landscape for you, helping you understand what moves to make.”

He emphasised that professional expertise is particularly vital for seniors who need to urgently navigate the labyrinth of financial planning, understand their current position and options, and craft a retirement plan that not only prepares them for their retirement day, but helps them secure their best possible post-retirement years too.

Nedbank executive for strategy and customer value proposition Bridget Nkandu agreed and stressed that partnering with an expert financial adviser is one of the best investments anyone can make to overcome the challenges they face, particularly as seniors.

“The most pressing concern for most people who are nearing retirement is the fear of outliving their savings, and this is exacerbated by ongoing debt and rising healthcare costs in their later years. Many are also banking on social grants, albeit meagre, to cushion their retirement, but worry that these grants may no longer be available when the time comes to retire.”

Building on these challenges, Magwegwe said the procrastination trap that many people fall into when it comes to planning and investing for retirement.

“Engulfed by these and many other present-day financial pressures, most people allow their long-term retirement planning to take a back seat. Thinking that if they can just make it through their current financial difficulties, they can focus more on retirement savings later. Unfortunately, that seldom happens," he said.

Fortunately, though, it's not all doom and gloom. Denver Keswell, a Senior Legal Advisor at Nedgroup Investments, offered some tangible retirement planning solutions. “The power of compounding cannot be overstated, so starting early in one's career is always optimal, but for those who have left their retirement savings a little late, the objective remains the same: save consistently and as much as possible.” All the panellists agreed that this strategy is the bedrock for achieving a retirement nest egg that can offer a sustainable post-retirement income capable of outpacing inflation.

Tax benefits are another vital aspect of retirement planning highlighted by the panel. Keswell underscored the various tax advantages provided by the South African Revenue Service (Sars).

“From tax deductions on contributions while still employed, to understanding and maximising tax savings at retirement and after retirement, making the most of these tax nuances can significantly bolster one's retirement funds,” he said.

Magwegwe said: “Nobody else is going to achieve your desired retirement outcome for you; that is entirely up to you, which is why you need to take responsibility, educate yourself, get professional advice, and take all necessary steps, wherever you currently find yourself, to ensure the best possible retirement you can.”

Nkandu urged individuals who are approaching retirement and may be anxious about their ability to retire well to stay positive and proactive.

“Retirement is not the end; it’s a new beginning, and it’s a huge milestone and achievement. You still have value to offer the world, and with proper retirement planning, even later in life, you have the best chance to have the funds you need to be able to live the meaningful and rewarding life that you deserve," she said.

PERSONAL FINANCE