Understanding the link between financial stress and mental health

Financial insecurity is not only about depleted bank accounts, it chips away at psychological resilience. When people lack financial confidence, they carry an invisible burden that permeates every aspect of their well-being.

Sanlam’s Age of Confidence campaign shows that most South Africans will need to work until the age of 80 to retire comfortably. That sobering projection alone creates a heavy psychological strain. Added to this, our 2025 Sanlam Benchmark report found that 44% of households have already dipped into emergency savings simply to make ends meet, a clear sign of how fragile financial and mental resilience have become.

 Financial insecurity and mental resilience: the link

A study confirms the link; financial resilience is associated with an approximately 37% decrease in the occurrence of mental health disorders. Importantly, the study also shows that this relationship is mediated by life satisfaction and household expenditure. Put simply, when people feel financially confident, they are more resilient mentally, too. But when they feel financial stress coupled with the knowledge of being underprepared to retire, the strain shows up as persistent stress, which can manifest as anxiety, depression, sleep disruption, headaches, or even weakened immunity.

Living longer, not better

By 2050, 15.4% of the South African population will be over sixty. Living longer does not always mean a better quality of life. Many pre-retirees worry about whether they will cope with rising healthcare costs, as aging often comes with chronic conditions. Medscheme reports that 13% of people under fifty face chronic conditions. A major concern is having adequate healthcare in retirement.

Few employees feel prepared for retirement, which erodes confidence and resilience as people face the possibility of re-entering the workforce or downscaling drastically. Planning for a longer career brings its own set of problems. Burnout and fatigue are becoming more common as older employees, who once expected to retire and enjoy their savings, now find that the lifestyle they envisaged is out of reach.

At a certain point in life, there is a natural desire to rest, relax, and spend time with family – but for many, this is no longer possible because of financial circumstances. That loss of rest and choice can lead to depression and declining well-being.

Retirement has also evolved into a transitional stage requiring a new purpose through part-time work, volunteering, or creative pursuits. Many pre-retirees hope to finally take up hobbies they never had time for, but working longer delays these opportunities, leading to frustration and dissatisfaction. Scaling down at a time when people expected to “live life large” has become the norm. Struggling to meet even basic commitments, and being forced to work longer due to financial need, erodes a sense of control – and that loss of control is strongly linked to poorer mental health outcomes.

Workplaces can help by recognising the factors that moderate these effects:

• Socioeconomic status: Higher income and education are linked to better mental health, even when working longer.
• Job type: Physically demanding or high-stress jobs are more harmful to well-being.
• Voluntariness: Choosing to work longer is far less damaging than being forced to.
• Support systems: Access to mental health resources, flexible work, and social support can soften the strain.

Given the situation, we need to look at retirement and financial resilience in a different way. Kanyisa Mkize, CEO of Sanlam Corporate, advises that we work together as leaders, employers, policymakers, and partners, and be willing to change; to rethink and to reimagine.

When I think about how we can lighten the psychological load of financial stress, a few practical solutions stand out. These are areas where employers, providers, and individuals can work together to restore confidence and, in turn, mental resilience.

• Financial literacy and communication

The Two-Pot System brings new flexibility, but also complexity. People need to understand the long-term impact of withdrawals, the tax implications of their choices, and the risks of cashing out at job changes. Employers have a vital role to play in driving these conversations.

• Health and retirement integration

Sanlam is partnering with Fedhealth to be its exclusive medical aid provider. This move is a step towards providing a complete health offering as part of the financial services value proposition. This model is an example of a strategic partnership and underscores the value of collaboration. Health-care and wealth-care must be integrated more.

• Rewards and incentives

Debt is one of the biggest drivers of distress. Incentives and loyalty programmes can support behaviour change – but as my colleague Nzwa Shoniwa, Managing Executive: Sanlam Umbrella Fund, often says, they work best when they are part of a broader system, not quick fixes.

• Digital wellness tools

From mobile apps for financial literacy to virtual consultations and gamified learning, digital tools can make education and support accessible and engaging.

 Confidence as protection

When people feel financially resilient, they are better equipped to handle life’s pressures. Without that confidence, financial worries silently undermine mental health.

That is why we cannot think of retirement planning as a purely financial issue. It is about mental health, dignity, and purpose. As leaders, employers, and partners, we must be willing to rethink how we support employees. If we tackle the confidence deficit directly, we can empower people not only to live longer, but to live with confidence and resilience.

* Borcherds is the senior manager and head of well-being at AfroCentric, a Sanlam subsidiary.

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