Ronel Talks Money: The Retirement Reality
The third annual Retirement Reality Report issued by 10X Investments confirmed that retirement readiness is a growing concern in South Africa and the Covid-19 pandemic has put more pressure on people to save for retirement. 49% of respondents do not have a retirement plan. The retirement readiness gap between men and women does not only exist but is getting worse. A large proportion of corporate retirement fund members say they do not know much about their retirement savings and also don’t care about it. In this interview I discuss the findings of the report as well as possible solutions with the CFO of 10X investments, Tim Merryweather.
A few of the questions we answer in this interview:
- Tell us more about 10X Investments and what you do?
- What was the reason behind the Retirement Reality Survey and Report? How did you obtain the data for this report?
- What was the impact of the Covid-19 pandemic on retirement readiness in South Africa?
- Only 6% of the respondents confirmed that they have a retirement plan and are actively executing their plan. This number correlates with stats released by National Treasury indicating that only 6% of the population will be able to retire comfortably. Does this emphasize the importance of having a retirement plan and executing it?
- 49% of the respondents indicated that they have no retirement plan. Explain to us what is a good and realistic retirement plan though?
- The biggest ‘secret’ with retirement is to make effective use of the time value of money and compounding growth on retirement savings. What advice will you give to people who are close to retirement age and not having sufficient savings?
- 10X FORMULA for retirement savings success: Save 15% of your gross earnings for your whole working life, invest those savings in a well-diversified high equity fund and – crucially – keep fees low.
If somebody is not happy with his / her retirement fund (performance / high costs etc.) – what are the options and what are the costs and tax implications to consider?
- The question of how much will be enough for retirement often creates uncertainty. This is where the replacement ratio concept and retirement calculator can help a lot. Can you explain this to us?
- The RRR reflected that the retirement readiness gap between men and women not only exist but is getting wider which is a big concern (earn 30% less than men, make up more than 51% of the population and have a higher life expectancy). What is the solution for women?
- 79% of those with household income < R20k a month – need to continue earning something in retirement, 76% of R20k-R50K, and 74% of those with HHI above R50k – having sufficient retirement savings does not correlate with earnings and emphasises that South Africans have a spending culture and not a savings culture?
- Nearly 4 out of 5 of those who said they did have a retirement savings plan accepted that they would need to keep earning some income after they had retired. This puts more pressure on workforce (high unemployment). Does this emphasize that there will be a bigger shift towards entrepreneurship in future or what is the solution?
- 56% respondents indicated that they cannot afford to save monthly and 29% indicated that saving for retirement is not a priority for them at this stage. How can this be changed practically?
- Given the statistics as per the RRR and your experience in the industry, what advice can you give to people with regards to retirement?