Share this post

You may need to be 80 before you retire

By Bruce Cameron
Co-author to The Ultimate Guide to Retirement in South Africa

Think twice before you decide to retire at 64 or even younger.

Many South African may not retire before the age of 80 according to a study on Sanlam Corporates internal retirement data. It has been known for a long time that most people retire too early and run out of money before they die This is the first time an age has been put to it.

Unless they can depend on relatives or charitable institutions many will die penniless.

They simple reason is that you may have saved to little money; and, because of longevity that will need even more money to live for more years. So by 80 you will have earnt more but will not live as long. But working till 80 is an enormous problem both for employment and health reasons.

Despite this warning, Anna Siwiak, head of product development at Sanlam Solutions, says the average normal retirement age for new entrants remains at 64, unchanged from 2024. However, only 42% of employers allow continued membership beyond this age, down from 51% last year, suggesting a tightening of post-retirement participation policies.

A growing number of employers are also questioning the adequacy of the current retirement age: 54% believe age 64 is not sufficient for members to accumulate enough savings, down from 66% in 2024. This reflects ongoing concerns about longevity risk and the sustainability of retirement income.

Nzwa Shoiniwa, managing executive of Sanlam Umbrella Solutions, says the reality for many South Africans is that retiring at 65 is simply not financially feasible.

‘Our findings from the Age of Confidence study were that less than 10% of South Africans can afford to retire at age 65. The majority would need to work well into their 70s - and in many cases, up to age 80 - to secure a financially stable retirement.’

Various Sanlam senior representatives gave a number of interconnected causes for retiring too early, which include:

Insufficient savings periods: Most individuals enter permanent employment only around age 30, resulting in a much shorter savings horizon than ideal. Most research shows you should save for at least 40 years.
Low replacement ratios: At age 65, the average South African has only achieved a 25 percent replacement ratio, well below the 75 percent needed for a comfortable retirement.(A replacement ratio is the amount of pension you will receive of your final basic pay at retirement).
Preservation issues: A staggering 47 percent of people cash out their retirement savings when changing jobs, eroding long-term wealth and the compounding of returns.
Under-utilisation of contribution flexibility: Many members never increase their contributions throughout their careers, even when their income rises. You should be contributing about 15 percent of your pay (you and your employer’s contribution to your fund).
Early access via the Two-Pot System: Since its introduction in September 2024, 36 percent of respondents interviewed for the Sanlam Benchmark Survey for retirement have already accessed their ‘early access’ savings. The study showed a concerning trend of financial burden among the participants, with a high number of participants using their Two-Pot emergency savings withdrawals to pay off debt. While the system offers welcomed liquidity in tough times, it also reduces long-term retirement capital.
Lack of professional financial advice: Nearly half of members rely on Google for financial guidance, and only 22 percent consult professional advisors, often leading to sub-optimal financial decisions.
Transferring to cash: If you transfer to cash in stages before retirement it could be ‘recklessly conservative’ particularly as cash will not keep pace with inflation over a six year period (the average time normally taken by retirement funds to transfer to cash).
Living longer: The World Health Organisation estimates that by 2030, one in six people will be over the age of 60, and by 2050 two thirds of the world population will over the age of 60. The question is how to get young members to acknowledge the cost increase in living of longer in retirement?

Do retirees realise the implications?

Shoiniwa says: ‘ Unfortunately, many retirees do not.

‘There’s a notable disconnect between expectation and reality. People often overestimate their readiness for retirement, leading to delayed action and, ultimately, compromised financial security. This false sense of security is a major contributor to the current crisis of confidence around retirement readiness in South Africa. This is part of the reason behind Sanlam Corporate’s Age of Confidence research – to create awareness among South Africans around their possible retirement reality.’

Impact of healthcare costs

Shoiniwa says many people do not realise how healthcare inflation continues to outpace general inflation. Many retirees are forced to downscale or even cancel their medical aid cover due to affordability constraints. Sanlam’s data shows a growing trend in retirees shifting to lower-tier medical schemes or withdrawing altogether, which places them at considerable financial and health risk.

He says: ‘The 2025 Sanlam Benchmark Survey revealed a concerning picture of medical scheme coverage and affordability in South Africa. Just 14 percent of those surveyed were members of a medical scheme. Approximately 23 percent of these members were over the age of 60, this exclusion from medical schemes showed a significant drop after the age of 65. This trend points to a steep decline in medical scheme coverage after retirement.

‘Affordability is a key barrier. In 2025, the average medical scheme premium rose by 10.5 percent, with monthly contributions ranging from R1 400 to as much as R10 000. Survey respondents identified the high cost of cover as a major obstacle to accessing medical schemes, particularly for the average South African household. The financial strain becomes even more pronounced in retirement, when income typically declines but healthcare needs often increase.

‘Retirement planning must extend beyond just income replacement. Healthcare planning, risk management, and access to professional advice must all form part of a holistic retirement strategy. Confidence in retirement isn't just about having money - it’s about knowing you’ve prepared adequately for life’s biggest risks, including health.’

Shoiniwa says compounding these challenges is a general lack of understanding around medical scheme benefits. While 68 percent of members report feeling confident in their understanding of their benefits, a significant 58 percent do not believe they are on track to accumulate enough capital for retirement.

‘While financial stress is a health hazard, participants were opting out of medical aid citing affordability as the main reason.’

Together, these findings paint a picture of a population grappling with both the immediate and long-term costs of healthcare, with affordability, complexity, and delayed planning emerging as major barriers across all age groups, Shoiniwa says.

The Sanlam Benchmark survey proves many things but the problem is that the main solution is only there when you are younger - when you can save more, when you can stay out of debt, when you can budget properly.

Among a number of solutions is that there should be better education of schoolchildren and even those in tertiary education, ensuring they do at least one course in personal finance.

There is a lot more detail on this in the book, The Ultimate Guide to Retirement in South Africa. For more information on how to purchase the book go to Buy Now on the website www.retirementplanning.co.za

https://retirementplanning.co.za/col-13-name-and-check-your-beneficiaries/

https://retirementplanning.co.za/the-importance-of-the-conduct-of-financial-institutions-bill/

https://ascor.co.za/how-to-draft-a-will/

https://ascor.co.za/you-need-an-estate-plan-to-protect-the-future-of-your-loved-ones/

https://ascor.co.za/things-to-have-handy-in-case-you-pass-away/

https://ascor.co.za/death-and-taxes-make-both-more-palatable-with-an-estate-plan/

Share this post

You may need to be 80 before you retire

By Bruce Cameron
Co-author to The Ultimate Guide to Retirement in South Africa

Think twice before you decide to retire at 64 or even younger.

Many South African may not retire before the age of 80 according to a study on Sanlam Corporates internal retirement data. It has been known for a long time that most people retire too early and run out of money before they die This is the first time an age has been put to it.

Unless they can depend on relatives or charitable institutions many will die penniless.

They simple reason is that you may have saved to little money; and, because of longevity that will need even more money to live for more years. So by 80 you will have earnt more but will not live as long. But working till 80 is an enormous problem both for employment and health reasons.

A growing number of employers are also questioning the adequacy of the current retirement age: 54% believe age 64 is not sufficient for members to accumulate enough savings, down from 66% in 2024. This reflects ongoing concerns about longevity risk and the sustainability of retirement income.

Nzwa Shoiniwa, managing executive of Sanlam Umbrella Solutions, says the reality for many South Africans is that retiring at 65 is simply not financially feasible.

‘Our findings from the Age of Confidence study were that less than 10% of South Africans can afford to retire at age 65. The majority would need to work well into their 70s - and in many cases, up to age 80 - to secure a financially stable retirement.’

Various Sanlam senior representatives gave a number of interconnected causes for retiring too early, which include:

Insufficient savings periods: Most individuals enter permanent employment only around age 30, resulting in a much shorter savings horizon than ideal. Most research shows you should save for at least 40 years.

Low replacement ratios: At age 65, the average South African has only achieved a 25 percent replacement ratio, well below the 75 percent needed for a comfortable retirement.(A replacement ratio is the amount of pension you will receive of your final basic pay at retirement).

Preservation issues: A staggering 47 percent of people cash out their retirement savings when changing jobs, eroding long-term wealth and the compounding of returns.

Under-utilisation of contribution flexibility: Many members never increase their contributions throughout their careers, even when their income rises. You should be contributing about 15 percent of your pay (you and your employer’s contribution to your fund).

Lack of professional financial advice: Nearly half of members rely on Google for financial guidance, and only 22 percent consult professional advisors, often leading to sub-optimal financial decisions.

Transferring to cash: If you transfer to cash in stages before retirement it could be ‘recklessly conservative’ particularly as cash will not keep pace with inflation over a six year period (the average time normally taken by retirement funds to transfer to cash).

Living longer: The World Health Organisation estimates that by 2030, one in six people will be over the age of 60, and by 2050 two thirds of the world population will over the age of 60. The question is how to get young members to acknowledge the cost increase in living of longer in retirement?

Do retirees realise the implications?

Shoiniwa says: ‘ Unfortunately, many retirees do not.

Impact of healthcare costs

‘While financial stress is a health hazard, participants were opting out of medical aid citing affordability as the main reason.’

Together, these findings paint a picture of a population grappling with both the immediate and long-term costs of healthcare, with affordability, complexity, and delayed planning emerging as major barriers across all age groups, Shoiniwa says.

The Sanlam Benchmark survey proves many things but the problem is that the main solution is only there when you are younger - when you can save more, when you can stay out of debt, when you can budget properly.

Among a number of solutions is that there should be better education of schoolchildren and even those in tertiary education, ensuring they do at least one course in personal finance.

There is a lot more detail on this in the book, The Ultimate Guide to Retirement in South Africa. For more information on how to purchase the book go to Buy Now on the website www.retirementplanning.co.za

Read more on this topic here:

https://retirementplanning.co.za/col-13-name-and-check-your-beneficiaries/

https://retirementplanning.co.za/the-importance-of-the-conduct-of-financial-institutions-bill/

https://ascor.co.za/how-to-draft-a-will/

https://ascor.co.za/you-need-an-estate-plan-to-protect-the-future-of-your-loved-ones/

https://ascor.co.za/things-to-have-handy-in-case-you-pass-away/

https://ascor.co.za/death-and-taxes-make-both-more-palatable-with-an-estate-plan/

You may need to be 80 before you retire

By Bruce Cameron Co-author to The Ultimate Guide to Retirement in South Africa

Think twice before you decide to retire at 64 or even younger.

Many South African may not retire before the age of 80 according to a study on Sanlam Corporates internal retirement data. It has been known for a long time that most people retire too early and run out of money before they die This is the first time an age has been put to it.

Unless they can depend on relatives or charitable institutions many will die penniless.

They simple reason is that you may have saved to little money; and, because of longevity that will need even more money to live for more years. So by 80 you will have earnt more but will not live as long. But working till 80 is an enormous problem both for employment and health reasons.

A growing number of employers are also questioning the adequacy of the current retirement age: 54% believe age 64 is not sufficient for members to accumulate enough savings, down from 66% in 2024. This reflects ongoing concerns about longevity risk and the sustainability of retirement income.

Nzwa Shoiniwa, managing executive of Sanlam Umbrella Solutions, says the reality for many South Africans is that retiring at 65 is simply not financially feasible.

‘Our findings from the Age of Confidence study were that less than 10% of South Africans can afford to retire at age 65. The majority would need to work well into their 70s - and in many cases, up to age 80 - to secure a financially stable retirement.’

Various Sanlam senior representatives gave a number of interconnected causes for retiring too early, which include:

Insufficient savings periods: Most individuals enter permanent employment only around age 30, resulting in a much shorter savings horizon than ideal. Most research shows you should save for at least 40 years.

Low replacement ratios: At age 65, the average South African has only achieved a 25 percent replacement ratio, well below the 75 percent needed for a comfortable retirement.(A replacement ratio is the amount of pension you will receive of your final basic pay at retirement).

Preservation issues: A staggering 47 percent of people cash out their retirement savings when changing jobs, eroding long-term wealth and the compounding of returns.

Under-utilisation of contribution flexibility: Many members never increase their contributions throughout their careers, even when their income rises. You should be contributing about 15 percent of your pay (you and your employer’s contribution to your fund).

Lack of professional financial advice: Nearly half of members rely on Google for financial guidance, and only 22 percent consult professional advisors, often leading to sub-optimal financial decisions.

Transferring to cash: If you transfer to cash in stages before retirement it could be ‘recklessly conservative’ particularly as cash will not keep pace with inflation over a six year period (the average time normally taken by retirement funds to transfer to cash).

Living longer: The World Health Organisation estimates that by 2030, one in six people will be over the age of 60, and by 2050 two thirds of the world population will over the age of 60. The question is how to get young members to acknowledge the cost increase in living of longer in retirement?

Do retirees realise the implications?

Shoiniwa says: ‘ Unfortunately, many retirees do not.

Impact of healthcare costs

‘While financial stress is a health hazard, participants were opting out of medical aid citing affordability as the main reason.’

Together, these findings paint a picture of a population grappling with both the immediate and long-term costs of healthcare, with affordability, complexity, and delayed planning emerging as major barriers across all age groups, Shoiniwa says.

The Sanlam Benchmark survey proves many things but the problem is that the main solution is only there when you are younger - when you can save more, when you can stay out of debt, when you can budget properly.

Among a number of solutions is that there should be better education of schoolchildren and even those in tertiary education, ensuring they do at least one course in personal finance.

There is a lot more detail on this in the book, The Ultimate Guide to Retirement in South Africa. For more information on how to purchase the book go to Buy Now on the website www.retirementplanning.co.za

Read more on this topic here:

https://retirementplanning.co.za/col-13-name-and-check-your-beneficiaries/

https://retirementplanning.co.za/the-importance-of-the-conduct-of-financial-institutions-bill/

https://ascor.co.za/how-to-draft-a-will/

https://ascor.co.za/you-need-an-estate-plan-to-protect-the-future-of-your-loved-ones/

https://ascor.co.za/things-to-have-handy-in-case-you-pass-away/

https://ascor.co.za/death-and-taxes-make-both-more-palatable-with-an-estate-plan/

By Bruce Cameron
Co-author to The Ultimate Guide to Retirement in South Africa