It is generally accepted that less than 10% of South Africans will be able to afford to retire in line with their expectations. If the future of work is expected to change as we expect it to, then this figure could drop even further and this has serious long-term consequences.
What are the two factors at play here?
- South Africa has a notoriously poor savings culture, with many of us putting off retirement planning or savings until it is too late.
- Very few people will attempt to build their own business – they will depend on an employer to provide a stable income and a regular salary to create a savings mechanism to meet retirement goals
Why this matters:
The average person will [theoretically] enjoy 480 pay cheques in their life, if we assume that they begin working at the age of 25 and retire at 65.
If your intention is to be an employee, that’s it – 480 chances to set something aside for your retirement and set it to work for you. This makes the assumption that you will never be retrenched, never be part of a business which closes down or runs into financial difficulty and never have a month where your living expenses exceed your income.
Mathematically, this is highly unlikely.
It is a tough question but one which needs to be asked: How many of your 480 chances have you missed so far?
The changing world of work
The challenge is further compounded by the changing world of work where organisations are constantly looking for more flexible working solutions and where the “freelancer” is expected to replace traditional employees.
For context, the World Bank estimates that 40% of US employees will be in “non-traditional jobs” (part-time, freelance or contractor) in the next 5 years.
This is a trend which is coming to South Africa and will play a fundamental role in your ability to secure your retirement.
Retirement: The challenge and the opportunity
Why should this matter to you?
In its simplest form, financial planning models and retirement calculators assume that you will:
- Earn 480 consecutive pay cheques without fail over a 40 year period
- Save between 10% and 15% of those pay cheques every month and put them into a retirement vehicle
- Enjoy equity markets that double every 7 years during that 40 year period
- Be debt free at age 65
- Be healthy
- Own your own home
As a network, we attempt to look at future trends and assess the impact this will have on your financial goals. We believe that the above is improbable for the majority of South Africans.
A high-quality financial advisor / planner will be able to assist you on this journey but the responsibility for reaching your retirement goals will fall to you.
It is our view that you should look at identifying sideline opportunities through innovative South African businesses like Flexy and BoardX (or their international peers) – or international peers like UpWork – and apply your skills to generate additional income to help you meet your retirement goals.
Your challenge for today:
Decide when you want to retire and then calculate how many more “pay-days” you will enjoy over that period of time.
When you know what the challenge is, you can focus on the solution.
If you are serious about wealth building and want somebody in our network to help guide you through the process, please complete the below and somebody will connect with you.
