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Infographic: Shaking up retirement

9 June 2016 | Retirement Outcomes

While planning for their golden years can seem challenging, it is important for members to know how to plan for an event that may be so far into the future. How do they know how much money they will need to invest today, for a better retirement outcome tomorrow? And how do they avoid their biggest fear … outliving their money? Viresh Maharaj, Chief Marketing Actuary at Sanlam Employee Benefits, shares valuable insights from the recent 2016 Sanlam BENCHMARK Survey.

These are the four major trends that will impact members’ future retirement savings, says Viresh:

Increasing longevity: the average South African is living longer.
Unemployment issues: most university graduates only have 18 years of gainful employment during their careers.
Restrictive regulation: Regulation 28 hampers maximum savings ability.
The digital age: is set to educate and empower non-financially savvy people.

What does this mean for members?

Improved longevity
Top among the emerging trends as the ‘new normal’ for retirement savings is improved longevity Longevity combined with poor savings outcomes will force fund members either to delay their retirement or continue working after their planned retirement date.

Retirement funds will in future have to cater for those who continue working until they are 70 or 80 years of age, for those who have fewer ‘pay cheques’ to work with and for those who prefer a flexible contribution rate.

18 years of active contribution to the economy
Elias Masilela, Executive Chairman: DNA Economics and National Planning Committee Commissioner, announced as part of the survey results that South African university graduates only had 18 years of active contribution to the economy – as it would take three to five years for them to find gainful employment.

Structural issues such as tough economic times, low employment levels and low savings levels add to the complexity. Against this backdrop, the traditional ‘save 15% of gross salary for 40 years’ retirement methodology is proving difficult to achieve.

Take a look at the infographic below illustrating the ‘new normal’ for retirement:

Source: Sanlam BENCHMARK Survey, 2016

Sanlam Life Assurance Company (Ltd) is a licensed financial services provider.

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