Exploring adequate retirement funding in South Africa: a KwaZulu-Natal financial planner’s view.
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Date
2018
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Abstract
The development of several social demographic and economic trends have created the
interest among financial analysts and the general population in planning for retirement.
By the year 2021 the number of South Africans past retirement age will be an estimated
4.4 million which should account for approximately 7.3% of the country’s population
(currently 3.8 million or 6.8% of the population) (Statistics South Africa, 2016).
The increase in South Africa’s population at large and longer retirement periods have
raised questions about financial preparedness for retirement. Economic issues such as
corporate downsizing, capped employer retirement contributions, changing of jobs for
greater remuneration and increased daily living costs have shifted the responsibility for
retirement financial well-being from employers to individuals.
Adequate retirement provision does not necessarily only affect the retiree but also the
family unit of the retiree as a whole, as the vast majority of households in developing
countries such as South Africa rely solely on one breadwinner.
A global financial planning survey “was conducted by the FPI in 2015. The survey shows
that only 38% of South Africans are confident that they will achieve their financial life
goals, with 55% indicating that they do not know where to start with financial planning
(Financial Planning Institute of South Africa, 2015)
Gustman, Mitchell and Steinmeier (1995), as sited in (Greninger, Hampton, Kitt, &
Jacquet, 2000) reported that, “there is no consensus in literature regarding the definition
of retirement. If we do not understand the meaning of retirement, is it possible to judge
whether a population is financially prepared?” This question underlines the importance of
gathering informative qualitative data such as goals and risk tolerances and quantitative
data, in order to develop a capital needs analysis to establish how clients can
successfully meet their retirement goals.
This paper aims to explore the role of the Financial Planner in the retirement planning
process.
Description
Masters Degree. University of KwaZulu-Natal, Durban.