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News24
04-08-2025
- Business
- News24
10 smart ways to invest and save
South Africa may have its fair share of problems, but that does not affect your potential to grow your money if you want to be secure in retirement or to build wealth. Investment is an important way to hedge against future financial disasters. The first investment step is to determine what you want to achieve with your investment. For example, investing in a single share is not the best option if you need an investment that will be available as an emergency fund in the short term. On the other hand, a savings account is not ideal as a long-term savings plan for retirement. Karen Wentzel, head of annuities at Sanlam Corporate, says investment is essential for good retirement planning. She points out that at age 25, with a retirement age of 65, you can expect to have only 480 pay cheques by the time you retire; at age 35, about 360; at age 45, about 240; and at age 55, around 120. READ MORE | MONEY MONDAYS | Why insurance is essential for young South Africans 'If you think of your income as finite, this can be a wake-up call and is a good reason to make every single month count,' she says. 'Making the most of every single pay cheque – both to save for the years when you won't be working and to save for big life events such as buying a property – is an extremely astute way to build wealth and live a confident life.' We also spoke to Marius Jooste, head of investment distribution support: Absa Global Investment Solutions, about 10 ways to invest your money, and he classifies the options according to short, medium and longer-term time horizons. 'We have to weigh up how risky the opportunity is, which means that some investments – for instance, bank deposits – are very secure and yield consistent interest, while other options – for example, listed shares – may at times be worth less than the initial investment amount to generate long-term capital growth,' he says. Let us start with short-term (available immediately up to two to three years), low-risk investment options that have become very attractive with the rapid rise in interest rates in recent times: 1. Bank account deposits Bank deposit accounts are safe options. They are ideal for short- and even medium-term savings goals. 2. Money market unit trust funds Flexible with the opportunity to outperform bank deposits at slightly higher risk. 3. Income unit trust funds Various risk options are available for slightly longer-term savings goals from six months to three years plus. For medium-term investment goals (two to five years), some additional risk can be added to the investment mix in the form of local and offshore bonds and shares: 4. Longer-term bank fixed deposits With the current high interest rates, very attractive rates are available if one commits to a longer fixed term. 5. Five-year fixed-rate investments Tax-friendly interest returns at maturity if you commit funds for five years. 6. Low and moderate risk unit trusts Low and moderate risk unit trust funds – these funds are managed to minimise investment risk with the chance of outperforming inflation over a three-to-five-year period. Longer-term investment opportunities (five to seven-plus years) are higher risk but offer the opportunities to significantly outperform inflation over time: 7. High risk unit trusts Unit Trust Funds with high risk characteristics – a wide range of funds comprising combinations of local and offshore shares, bonds and cash, managed to achieve long-term objectives. 8. Stockbroking portfolios A range of trading options are available, from self-management to management with the assistance of a professional portfolio manager, allowing you to take advantage of the recent significant weakening in domestic and foreign share prices – a very attractive time to buy for the long term. Key considerations to make your money go further: 9. Calculate tax benefits Second-last, but by no means least, it is essential to start calculating the maximum tax benefit one qualifies for to invest in a retirement annuity before the end of the tax year on 28 February 2023. Most of the investment options mentioned above are available within this option, and it is advisable to consult with a qualified financial adviser to make the most of this opportunity. 10. Expensive debt The final option and one to consider first, is to see if you have any expensive debts that, if paid off, could significantly reduce your interest costs. Distinguishing between good and bad debt and maintaining a healthy overall debt level that one can afford, is crucial for financial stability. Jooste says that while it is true that any investment option can only be of greater value if one acts as early as possible, one should always remember that past investment performance is no indication of future performance, and therefore investment returns can never be guaranteed.
The Citizen
27-07-2025
- Business
- The Citizen
Only 8% of women are confident about retirement
Employers, trustees and policymakers must work together to ensure than women can save more to be more confident about retirement. In an age where women should be equal to men in every way, women are still far behind men when it comes to being confident about retirement. New research from Sanlam Corporate reveals a sobering reality: only 8% of female retirement fund members feel very confident that they will be able to retire comfortably. According to the Sanlam Benchmark 2025 Consumer Study, nearly half (46%) of women believe they will never save enough to retire, while just 33% feel financially secure about their future, compared to 51% of men. 'This is not just a research finding but a quiet crisis,' Oletilwe Ramashala, head of business development and strategic partnerships at Sanlam Corporate, says. 'It reflects a deep and persistent anxiety that many women live with every day and it is driven by structural, economic and social inequalities that women did not create.' ALSO READ: Poor financial literacy about retirement costing SA and consumers millions Why do women fall behind in retirement savings? Sanlam's research identifies these key reasons why women continue to fall behind in retirement savings: Interrupted careers due to maternity leave and caregiving responsibilities; Lower lifetime earnings, driven by persistent gender pay gaps; Over-representation in part-time or informal work, often with limited benefits; Prioritising family needs over personal financial goals; Limited access to financial advice, due to time constraints or lack of confidence. 'These are deeply human, compassionate choices women make when stepping up for their families and communities, but they often come at a long-term cost to their financial security.' Ramashala believes it is time for a shift from awareness to action and agency. 'We must empower women to start saving earlier, engage with advice confidently and make small but consistent decisions that protect their future selves. The tools are there. What we need now is support and partnership.' ALSO READ: South Africa's retirement time bomb is ticking… What can make women save more to feel confident about retirement? Sanlam Corporate calls on employers, trustees and policymakers to double down on their commitment to women's financial wellbeing and offer: Flexible, well-governed umbrella fund solutions Group risk cover to protect families from unforeseen events Health care solutions that support mental and physical wellbeing Personalised, data-driven engagement tools such as the Age of Confidence calculator and behavioural nudges to drive action. 'We must move beyond viewing retirement as a technical conversation. It is a human one about dignity, freedom and choice. Empowering women to take meaningful steps for their retirement early and with a long-term vision will give them greater confidence to retire comfortably. 'To every woman reading this: your future is worth investing in. You deserve a retirement marked by peace of mind, not worry. It is never too early or too late to begin.' Ramashala also urgers employers and trustees to remember that the women in their workforce are not just employees but pillars of their communities, caregivers and leaders. When women retire well, society rises with them.'
The Citizen
21-06-2025
- Business
- The Citizen
Poor financial literacy about retirement costing SA and consumers millions
Although most consumers believe they will save enough for a comfortable retirement by the age of 58, research shows it is closer to 80. South Africans' poor financial literacy is costing the country and consumers millions, especially where preparing for retirement is concerned, with nearly half of the respondents in a recent survey saying they need more financial education. According to the 2025 Sanlam Benchmark Survey, the 44th edition of some of the country's most comprehensive research on the retirement fund industry, respondents called for school-level financial education. If you ever said you learnt nothing useful at school, you are probably right: financial education at school level would have made a huge difference in the lives of many consumers and would have lessened the pressure on South Africa's retirement system. ALSO READ: Three financial literacy truths I wish I knew at 20 Financial literacy gap could cost millions Kanyisa Mkhize, chief executive at Sanlam Corporate, says the country's retirement system is under pressure, not only from economic strain but from a widespread lack of access, understanding and early intervention. According to the 2025 Sanlam Benchmark Survey, financial literacy gaps could quietly cost the country millions in lost savings, missed opportunities and poor long-term outcomes. Mkhize says as South Africa's population ages and the pressures of modern work life intensify, the research underscores the urgent need for a holistic approach to employee health and retirement well-being. 'The findings reveal that tackling financial as well as mental stress is critical to ensure long-term health and economic security for South Africans. The 2025 research spanned interviews with over 70 stand-alone funds, 168 participating employers in umbrella funds and over 500 consumers.' ALSO READ: Smart ways to improve your financial literacy Consumers not saving enough for retirement The key findings show that: Only 42% of retirement fund members believe they are on track to save enough for retirement. 43% think they will maintain their current standard of living in retirement. However, six in ten funds say members will not be able to retire comfortably by the age of 64. Fewer than 40% of employer funds allow continued membership after retirement. Nearly half (49%) of members are unaware of the post-retirement options available to them. 92% are aware of the two-pot retirement system, but only 49% feel confident about their knowledge and understanding of the impact of accessing these savings. 44% of those who withdrew from the emergency savings pot used the funds to pay off debt. 64% say regular financial education is very important, yet only 11% had access to a financial adviser through their employer fund when they withdrew from the fund, while nearly 50% rely on Google for financial advice. 68% feel confident about understanding their medical aid benefits, yet only 47% feel the same way about their risk benefits. The number of employer funds offering critical illness benefits increased from 5% in 2019 to 33% in 2025, while umbrella fund participants providing these benefits jumped from 8% in 2019 to 49% in 2025. ALSO READ: Financial literacy at an early age is key for success later Significant cost of what we do not know about financial literacy Mkhize points out that financial stress affects productivity as well as employee health and warns that this has major implications and knock-on consequences for individuals, their families and society and the economy. 'This underscores the need for financial literacy and advice. We see people make life-altering financial decisions without the information, support or advice they need while the right intervention at the right moment can shift outcomes. The opportunity is there – we just need to scale it.' The good news is that amid the less positive survey findings, there are also encouraging signs of progress with engagement increasing, awareness growing and targeted education starting to shift behaviours. 'The challenge now is sustaining this momentum and ensuring it delivers real, measurable improvement,' she says. Mkhize says the cost of what we do not know in financial literacy is significant. Just 42% of pension fund members believe they are saving enough to retire, while only 43% say they are confident they will be able to maintain their standard of living. More than half (51%) worry they will not be able to leave a legacy. She emphasises that the picture is equally troubling system-wide, with six in ten funds saying their members will not retire with enough money by the average retirement age of 64 to maintain their standard of living. ALSO READ: The three phases of retirement and how to maintain your quality of life Financial literacy also needed in retirement Only four in 10 believe that the average retirement age of 64 is still sufficient for financial security, while fewer than 40% of employer funds allow continued membership after retirement, forcing members to navigate a complex financial environment just when they need clarity and support. Only 23% of employer funds offer critical illness benefits and just two in 10 tailor their annuity strategies for different types of members, highlighting a need for more personalised, fit-for-purpose planning, Mkhize says. She points out that the survey data shows that understanding, or the lack of it, drives behaviour, with 49% of members saying they are unaware of their pension options at retirement and one in five saying they have not engaged with their benefits because they 'don't know enough about retirement planning'. 'Yet most consumers also believe they will have saved enough to retire comfortably by the age of 58. Conversely, Sanlam Corporate's internal data shows the age at which most South Africans can afford to retire comfortably is closer to 80. 'This shows the critical need for financial literacy to empower people with the right information to make informed decisions.' ALSO READ: South Africa's real retirement age? 80! People only seek financial literacy for retirement when it is too late The survey shows that most people only seek advice within nine years of retirement and for many there is not enough time to make adjustments that will have a significant effect on their retirement outcomes. 'You cannot act on what you do not understand and right now, the cost of that lack of understanding is carried by individuals, families and the economy,' Nzwa Shoniwa, managing executive at Sanlam Umbrella Solutions, says. The segments of society most at risk from making bad financial decisions due to poor financial literacy are young people and women. Shoniwa says the financial literacy gap does not affect all consumers equally, with some groups falling behind in ways that could affect their long-term health and retirement outcomes. 'Women are particularly vulnerable, with only 38% believing they will maintain their lifestyle in retirement, compared to 62% of men. Women are generally less confident about their understanding of retirement benefits, with only 39% reporting confidence about their benefits compared to 61% of men. 'This gap extends to other areas including risk benefits, financial advice, value-added benefits like rewards, medical aid, gap cover, primary health insurance, employee assistance programmes and even understanding the financial impact of withdrawing from the emergency savings pot.' Shoniwa adds that young adults are also at risk. 'For many starting their careers, typically between ages 24 and 30, joining a medical aid is often a condition of employment. Just 17% of those under 30 are covered by an employer medical scheme, while 18% receive cash as part of their salary to purchase their own product. ALSO READ: 50 and still haven't saved? Here's how to kickstart your retirement plan today Appetite for financial literacy about retirement is strong 'However, the complexity and cost of available products can lead to underinsurance, opting out or delayed long-term planning. This group, especially those between the ages of 31 and 40, is also the most likely to cite rising living costs as a barrier to long-term planning. Compounding these decisions, many only start saving for the long term in their 40s.' That is why it is good news that the survey shows the appetite for better financial guidance is strong, with 64% of members saying regular financial education is very important and nearly half of employer funds supporting retirement planning in schools, while 49% of employer funds believe targeted communication could improve outcomes. Shoniwa says there is momentum, with nearly 60% of members reviewing their benefits in the past year, probably prompted by the introduction of the two-pot retirement system. 'As a result, 66% know the value of their savings and 59% understand how their investments are allocated. 'We see growing engagement but to truly close the gap, we must embed education more consistently, from the classroom to the payslip.' In addition, Shoniwa points out that no single player can fix the system. 'It requires aligned action from government, employers, advisers and administrators. Employers are uniquely placed to support members early. Guidance from the first payslip – particularly around group risk and preservation – can make a lasting difference. ALSO READ: We are living longer – how to plan for a long retirement Better communication needed He says retirement fund administrators must do more than communicate. 'They must deliver seamless advice, access and behaviour-linked incentives. Funds must also outperform and align with members' long-term goals. 'The 2025 Sanlam Benchmark data is more than a call to action – it is a roadmap. South Africans want better outcomes and they are ready to engage. What they need now is consistent education, clearer communication and simpler systems. 'What we do not know is already costing us but what we choose to teach and how we teach it together could change everything. Financial literacy is the foundation for a system that delivers not just outcomes, but dignity,' Mkhize says.
Daily Maverick
26-05-2025
- Business
- Daily Maverick
Adding life to years, not years to life – as of this week, 65 is the new 60
This week, the mandatory retirement age in South Africa officially goes up from age 60 to 65. On the surface, this is a policy shift driven by longer lifespans and economic realities – a global trend hitting home. On a deeper level, it will likely affect many people, especially those over or close to 60 who were perhaps looking forward to retiring. Many will be focusing on the practicalities: planning differently for a longer working life. For others, this change may be an opportunity for a much bigger, more vital conversation about how they plan to spend their precious leisure time in the years ahead. A global shift It is not just South Africa where retirement is moving out. In the US in the 1980s, there were about 2.5 million people who worked past age 65. That number is now 11 million – an increase of 400%. In that same time, the US population has only increased by 50%. The scales, it would seem, are tipping towards longer working lives. According to futurist Tracey Follows, retirement might not even exist in the Western world by 2040. The rising cost of living and lengthening life expectancies mean it may be necessary for people to continue working into their old age to support themselves. Indeed, a recent study by Sanlam Corporate found that most South Africans will now need to work until they are 80 to retire comfortably. Maybe this is not such a bad thing. For years, we've accepted the notion that, at a certain age, we should universally step away from purposeful contribution. But does that truly serve us? Is a fixed retirement age an outdated concept we've clung to? Perhaps the question needs to be not just about when we retire, but if the traditional concept of retirement – a relatively new idea in and of itself – is due for retirement. A brief history of a recent invention In the Stone Age, you worked till your death. Most people were dead by 20. This was the case for millions of years. Up until the 1800s, nowhere in the world had a life expectancy higher than 40 years. In the early 1900s, the average life expectancy was only 32. Retirement as we know it was only proposed in 1881 by Otto von Bismarck, ruler of Prussia. Von Bismarck suggested the government give pensions to the few German citizens who lived over 70. Life expectancy in Germany at the time was 39 years. The policy was passed. But the message was clear: most people will not retire as they wouldn't make it that far. That remained the message when retirement was introduced in the 1930s in the US for people over the age of 65. Life expectancy for American men was around 58 at the time. Globally, life expectancy is now over 70. As a result, some suggest that the retirement age should be pushed to 75. Governments are not opposed to raising the threshold – in the UK, the retirement age is set to increase to 67 in the next three years. In France, millions-strong protests ensued after the government raised the pension age from 62 to 64. The value of knowledge in an economy Leaving aside the issue of the financial necessity of working, there is broader value for keeping older people in the working world. Tertiary institutions across the world know the value of retaining skills beyond the age of 65. The US and Europe, for example, are teeming with professors above the retirement age. A total of 13% of US professors are over 65, compared with just 6% of other US workers. There are many reasons for this, including that professors possess invaluable expertise and knowledge. But it's not just them: people reach the peak of their expertise in their sixties. They do not stop adding value after 65. That is where the concept of phased retirement comes into its own. A staggered or phased retirement that sees retirees step back but still contribute could hold many benefits for organisations and workers alike: enabling skills transfer; more time to find and train new candidates; mentoring and coaching opportunities; and the retention of highly skilled workers at a reduced cost due to fewer hours worked. In South Africa, it could also create much-needed space in the workforce for unemployed young people. Additionally, a phased approach provides retirees a chance to buy more time for family, leisure, travel and taking care of their health, without having to dip into their retirement fund. The question then becomes, how might these phased retirees, with more time on their hands and no real financial pressure, spend their time? Stepping away from work, even partially, can result in a loss of identity and vitality for many, even if it feels like a deserved break. Perhaps they could be encouraged to volunteer as a way to add meaning to their life and that of others. For some, it might be to start a business. According to the Global Entrepreneurship Monitor, the number of entrepreneurs over 55 is on the rise. Are young people pointing the way? While we can't predict the future, observing current megatrends – long-term driving forces that are likely to have a growing global impact – can give us a good sense of where things might end up. Changing demographics is one such megatrend, and a key sign that traditional retirement could be on the way out is how younger generations already live and work. Thanks to the gig economy and remote-working options, many young people have embraced hybrid lives, integrating work with substantial leisure. For many millennials, the idea of a traditional retirement – one focused on leisure and relaxation – has evolved into a desire for greater work flexibility. The point is that those of us who have had the privilege to work – and who have the privilege to retire – also have the privilege to think imaginatively about what we want to do with our time, whether working or playing. If we are living longer, how can we add life to our years rather than just years to our life? Many South Africans do not have this opportunity – not just to retire, but to work in the first place. Our unemployment rate reached 41.9% in Q4 of 2024. Many will never be employed in the formal economy – they won't have retirement plans, phased or otherwise. It's a stark reminder that in our country, retirement and leisure are not universal rights, and we should not squander them. DM
