Johannesburg – Less than a third of respondents will feel the squeeze that comes with taking care of their elderly parents and children, a survey revealed.
The recently-released Old Mutual Savings and Investment Monitor for 2017 looks at the saving and investment behaviour and attitudes of metro, working South Africans. The survey consists of face-to-face interviews with 1 000 South Africans.
It showed that 28% of respondents are part of the Sandwich generation. These are people who are supporting their children and parents and older dependents. This is most common among black households, with an incidence of 36%.
Of the respondents, 37% expect their children to look after them when they are older, while in turn 58% of respondents expect to support their parents in future. A third (33%) of respondents expect the government to take care of them if they can’t do so themselves.
Rian le Roux, strategist at Old Mutual Investment, explained that this will improve only if the economy grows faster and jobs are created for young people. This will ease the pressure on their “sandwiched” parents to take care of them.
Two important gifts to give yourself
Le Roux told Fin24 that there are two important gifts you can give yourself. The first is to make sure your children are independent of you by giving them an education that will enable them to get meaningful work and income.
The second gift is for you not to be dependent on your children. “Throughout your lifetime, tailor your expenditure to income. Put away enough for retirement. This takes a lot of financial planning.”
“A lot of people don’t do it, people assume they will be fine,” said le Roux.
More than half (53%) of respondents have pension and provident funds, and 30% have retirement annuities.
This is worrying considering the high dependency ratios in South Africa, said Malusi Ndlovu, head of Old Mutual corporate consultants. “Over time this means these people will depend on the state, their friends and family.”
But where do I start?
People often don't know where to start when it comes to retirement planning, said Ndlovu. This is why it is important for employers to provide a compulsory retirement savings vehicle all employees can belong to.
Also, there are incorrect perceptions of cost and affordability. “People think they need to save a significant portion of their salary. That is true over a long term, but not from where you have to start.”
People also believe their family and government will take care of them. Among high earners, 20% expect government to take care of them, said Ndlovu. There is a misunderstanding of the old age grant system. People don't know that if they earn a certain amount of money, they won't qualify to be recipients of the grant.
People also often discount the future, and when reality hits, it is often too late, he said.
WATCH: Why it's important to save for retirement
* Do you have a successful savings plan or story to tell? Share it with us nowand help others to also become Savings Heroes.
SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.
Read Fin24's top stories trending on Twitter: