SA faces savings disaster: expert

Cape Town - South Africa faces "social disaster" if people allow financial pressure to interfere with their savings goals, an expert said on Tuesday.

Chris Busschau of the Financial Intermediaries Association of SA said research had confirmed that the vast majority of consumers would retire without the capital to sustain even a moderate lifestyle.

"Many will in reality be destitute, without family support," he said in a media release.

The enormous financial pressure experienced by South Africans over the last few years had resulted in an increasing number of people deviating from their long term savings goals.

This put them and their futures at risk.

"It is hardly surprising that market research is uncovering a looming social disaster," he said.

People often allowed their immediate wants or needs to take priority over provision for the future.

This was often evident in people cashing in their retirement policies to fund purchases such as home improvements, a new car or even luxuries such as holidays.

He said it was crucial that consumers started to make themselves aware of their true savings requirements.

"It is important that people start taking their financial commitments seriously and have an overall financial plan that addresses both their short and long term needs.

"If they don't do this, then what may be classed as poor savings habits now can prove to be disastrous a few years down the line."

Even if they were struggling financially, they should not put themselves at further risk by cancelling short or long term insurance policies or by "buying down" on their health insurance or medical aid cover.