To save or not to save : there is no question
H
istorically , South Africans are not great savers . Not only do we tend not to save , but we also spend money we do not have . According to Statistics SA , our biggest expenses are housing and utilities , followed by transport . These trends shifted during the 2020 hard lockdown period .
Last year was one where many South Africans suffered financial difficulties , affecting both their lifestyle and spending habits , with approximately 60 % of South Africans dipping into their savings during the hard lockdown period to cover financial shortfalls .
Of course , PPS members bucked that trend .
Within the PPS membership base on our platform , only 16 % withdrew from their discretionary savings during this period ; drawing down on average more than 20 % of the investment ’ s value .
Notably , the majority of PPS members ’ monthly savings commitments remained in place and they continued to strive towards their savings goals with less than a sixth having paused their monthly contributions since March 2020 and 6 % opting to reduce annual debit order escalations rather than stopping altogether .
This is good news because , in an ever-changing world , we should adapt saving strategies but not the very concept of saving . Not only for a rainy day but also for our retirement .
Planning for a 30-year retirement used to be sufficient , but data from PPS members suggests that the average professional male will live to 95 and the average professional female to 100 . Depending on their retirement age , people will likely have to start planning for their retirement to last around 40 years .
Theo Vorster , CEO of Galileo Capital Holdings , recommends that one should always consider working for a few extra years , whether you think you have saved enough for retirement or not . “ This will not only extend the amount of years you can contribute to your pension fund , but also decrease the amount of years you will depend on your fund .”
This may not be a feasible option as many companies and most government departments have mandatory retirement ages of 60 or 65 . Therefore , save and plan .
While the path to our country ’ s economic recovery remains uncertain , we encourage you to start or continue saving in practical ways without affecting your disposable income .
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