Retired South African wealth investors are no longer concerned with purchasing luxury goods, such as holidays or new cars. Focus on investing toward these items has plummeted in recent years, from 28% in 2017 to just 4% today. Instead, 28% of local retirees would now rather invest their disposable income back into their retirement savings – up from 23% three years ago. A further 25% would invest in another type of investment vehicle such as equities, bonds or commodities.
This was revealed in the recently released Schroders’ Global Investor Study 2020 – an annual survey of more than 23,000 wealth investors, conducted across 32 locations around the world between 30 April and 15 June 2020.
“Following a year of significant investment and geopolitical uncertainty, it is unsurprising that retirees are reigning in their retirement ambitions and instead opting to channel their disposable income back into their pensions to boost their pots,” says Kondi Nkosi, Schroders’ Country Head – South Africa . “This is a rational and sensible approach to take, particularly bearing in mind that 42% of local investors expressed concern that their retirement income will not be sufficient.”
Indeed, 22% of non-retired South Africans expect to be working the same or even an increased number of hours per week in their ‘retirement’, with 30% citing that the consistent changing of rules around retirement by Government was hindering their ability to save.
“There is no silver bullet to successfully building up a sufficient retirement pot apart from commitment, patience and time in the market,” says Nkosi. “It is therefore reassuring to see that the average savings ratio is a healthy 16.51% in South Africa – this comes as 65% agree that state provisions alone won’t be enough to support them in retirement.”
Worryingly, Nkosi notes that 30% of respondents say they don’t understand the options available to them with their retirement savings. “It is concerning to see that investors struggle with the retirement options available to them.
“After all, clarity and understanding are key for people to build up sufficient retirement savings, whether that be through their general investment savings or, indeed, a specific retirement plan,” Nkosi concludes.