Survey reveals habits of effective pensioners
The results from Sanlam’s fourth annual retirement benchmark survey were made available this week, and offer valuable insight into the saving habits of 50 affluent pensioners compared to an average core group of 250 participants.
For the first time, a core group of participants from across the spectrum was measured against an additional sample of participants representing the affluent sector with incomes in excess of R25 000 per month.
Of the core group, 52.4 per cent believed that they have not saved enough capital to last them through retirement. However, only 24 per cent of the affluent group reported not having saved enough.
“What is a growing concern is the percentage of average pensioners with a shortfall between their monthly income and expenses that continues to rise (59.2 per cent in 2014, 51.0 per cent in 2013 and 33.3 per cent in 2011),” the report adds.
“The results of the 2014 pensioner benchmark survey highlighted the importance of obtaining quality financial advice and the benefits of starting to save early for your retirement years. With these two building blocks in place, retirees are able to look forward to making their retirement years the best years of their life,” Sanlam states.
The survey results show that the core group’s retirement age increased slightly from 59 in 2013 to 60 in 2014, and their average period of contribution increased to 29.8 years. By comparison, results from the affluent group showed approximately 33.2 years of contributions, with individuals both starting formal employment and long-term savings at an earlier age.
The number of core group individuals who stopped their retirement contributions at some stage during their employment, through withdrawal at either resignation or retrenchment, increased from 17.1 per cent to 20.8 per cent. Of the individuals who made a withdrawal, 63.5 per cent withdrew their full benefit in cash as opposed to 48.8 per cent taking the benefit in cash in 2013. The cash was used to pay for the rising living expenses for 52.4 per cent of respondents in 2014 compared with 29.4 per cent in 2013.
This trend is very different among affluent retirees, with only 12 per cent of respondents indicating that they withdrew from their retirement savings at resignation or retrenchment. From those that withdrew, 50 per cent preserved part of their benefit or purchased a retirement annuity, while the other 50 per cent opted to withdraw their full benefit in cash. Only 20 per cent of these individuals used the cash to pay for living expenses with 80 per cent either saving or investing in investment instruments or business ventures or settling or reducing their mortgage bonds.
The number of core group pensioners receiving financial advice before retirement has dropped slightly from 60 per cent in 2013 to 57.6 per cent in 2014. On average, these pensioners received financial advice 11 years before retirement, whereas, ideally, active members should receive financial advice from much earlier on in their working career. The proportion of general pensioners who received financial advice from their company’s HR office continues to rise. Around 72 per cent of affluent retirees sought financial advice from professional financial advisers.
Article from RISKSA (http://www.risksa.com/survey-reveals-habits-of-effective-pensioners/)