BY: TANA MALINGA
Many South Africans believe they are ready for retirement. They are saving a little money, belong to an employer pension fund, or keep funds in a bank account. These steps create a sense of comfort and confidence about the future.
But financial experts warn that this confidence may not always reflect reality.
Research from FNB’s 2025 Retirement Survey highlights a worrying gap between what people believe about their retirement readiness and what their finances actually show. While about 60% of South Africans say they have a retirement plan, nearly 80% of those individuals believe they are on the right track.
However, deeper analysis reveals that many of these plans may not be strong enough to support life after work.
According to Samkelo Zwane, Product Head at FNB Wealth and Investments, only about one in four people who believe they have a retirement plan actually hold a retirement annuity. Many depend mainly on savings accounts or employer pension funds without fully understanding whether those funds will be enough to sustain them in the long term.
The result is a stark national reality: only around 10% of South Africans retire comfortably, with enough income to meet their basic needs. The majority face financial pressure during their retirement years.
One of the biggest misunderstandings is the belief that simply saving money equals proper retirement planning. In reality, retirement planning involves far more than putting money aside. It requires careful calculation of future costs, an understanding of how long retirement may last, and preparation for rising living expenses.
Bheki Mkhize, CEO of FNB Wealth and Investments, explains that although awareness about retirement savings has improved over the years, many people still underestimate the real cost of retirement. Medical aid contributions, insurance premiums, groceries, fuel and other daily expenses continue to increase, often faster than inflation.
For many retirees, this financial pressure only becomes clear after they stop working.
Interestingly, the survey shows that people already in retirement are often less confident about their finances than those who are still employed. Younger workers tend to feel optimistic about their preparation, while older individuals who have experienced retirement realities tend to be more cautious.
Renee Caughlan, Product Portfolio Manager at FNB Wealth and Investments, notes that many retirees find their income struggling to keep pace with rising costs. Essentials such as food, transport and healthcare steadily increase, making financial planning feel like a moving target.
Another challenge affecting many pensioners is family responsibility. Some retirees continue supporting adult children or grandchildren, placing additional strain on their retirement income. In other cases, families must help elderly parents whose retirement savings can no longer cover the costs of assisted living or increased healthcare needs.
Experts also warn against what they describe as passive retirement planning. Many workers assume that being part of a company pension fund automatically guarantees financial security later in life. Yet contribution levels, investment growth and long-term income needs often go unchecked.
Ester Ochse, Product Head of Integrated Advice at FNB, stresses that owning a retirement product does not automatically mean someone is financially prepared. Small or irregular contributions may help, but they may not be enough to support the lifestyle many people hope to maintain in retirement.
She also cautions against relying too heavily on cash savings or fixed deposits for long-term retirement planning. While these options may feel safe, inflation gradually erodes their value over time, especially across decades.
Research suggests that people who retire comfortably usually take a more balanced and proactive approach to their finances. Many combine different strategies, including regulated retirement savings such as retirement annuities, property investments that can generate rental income or be sold later in life, and businesses or consulting work that continue to produce income after retirement.
Beyond financial planning, retirement also carries an emotional dimension. Uncertainty about money, future expenses and life changes can create significant anxiety for many people.
Financial advisers say clarity is often the most effective way to reduce this stress. Understanding the numbers, reviewing plans regularly and seeking professional guidance can help people feel more in control of their future.
Those who start planning early, avoid withdrawing retirement savings when changing jobs, and review their strategies regularly are far more likely to achieve stronger outcomes.
The message from financial experts is not meant to cause panic, but rather to encourage awareness. Retirement today is no longer a short phase at the end of life. People are living longer, remaining active longer and often spending decades in retirement.
This reality requires earlier planning, stronger financial discipline and regular review of retirement strategies.
Small steps taken early can make a meaningful difference over time. But ignoring the true cost of retirement only increases the financial pressure later in life.
In the end, the most important question remains simple but powerful: Do you truly understand what retirement will cost, and are you genuinely prepared for it?
IMAGES SUPPLIED
