With soaring costs of living and priority given to paying off debts, fewer people are putting away adequate amounts that might one day give them the option of stepping away from full-time employment.
No other area of society is as burdened with antiquated ideas as retirement. Much of the world has operated on the same broad outlines that were established more than a century ago.
South Africa, despite its well-respected Constitution and legal frameworks, is no exception.
Our journalist, Lyse Comins, reported this week on the concerning decline among the middle class of those saving for retirement. With soaring costs of living and priority given to paying off debts, fewer people are putting away adequate amounts that might one day give them the option of stepping away from full-time employment.
That is a dreadful proposition to many later in life, with reliance on family and drastic cost-cutting becoming the only alternatives.
Compounding the issue is that employees over a certain age are often compelled to retire. While the Constitution is clear on discrimination, and non-government workers can’t be forced to retire, it is a norm for employers to insert a contractual clause that enables it in practice.
It’s a policy that can be traced back to the 1800s. In a bid to undercut Marxism, German statesman Otto von Bismarck proposed that anyone over the age of 70 must retire and be given a government pension.
We know better in 2025. We live healthier lives than at any other point in human history. We have an abundance of research indicating that staying physically and mentally active is good for us. Those who remain active in the workforce after 65 are also a benefit to the economy.
Make no mistake, however, that reality does not justify depriving people of the dignity of making a choice when the time comes. And the issue is that for increasing numbers, it’s becoming a non-choice.
The early evidence suggests that the Two-Pot system introduced last year is a positive development. While some confusion persists, policyholders have been able to get emergency funds while still protecting their long-term financial health.
But what South Africa still requires is policies or incentives that encourage saving in the first place. The barrier to entry is often too daunting: in addition to debilitating economic circumstances, poor financial literacy rates make it difficult to know where to begin
We need creative thinking and solutions. Plenty of both have been theorised — they simply require the courage to implement.
One such idea is the Save More Tomorrow plan designed by economists Shlomo Benartzi and Richard Thaler. In essence, it would see retirement contributions kick in on increases to the salary that employees receive from the point it is adopted. This would sidestep the painful consideration we all face of putting money aside for an uncertain future.
There are countless other good proposals out there. But they have to begin with us thinking differently about retirement.