Why delaying retirement planning is costing young South Africans millions

The retirement reality check: Why 'later' is now for younger South Africans

It is said that success favours the focused and that retirement is not an age, but a mindset. This also rings true for retirement planning, when fear of complexity often leads to procrastination in younger generations. 

The landscape of retirement is changing. South Africans are living longer, navigating unpredictable job markets, and grappling with the rising costs of living. Generation Z (born between 1995 and 2012) and younger generations can often only start saving for retirement much later because many could not find immediate employment in a struggling economy. 

However, retirement planning cannot be a distant, abstract concern to worry about "later" for these generations. As soon as they have found employment, they must realise that later is already here. 

It is a shift that demands a new conversation. One that moves from “I’ll plan when I’m older” to “I must start now”, because younger generations face unique financial headwinds that make early planning non-negotiable. The traditional, linear career path with a defined benefit or even a defined contribution pension is largely a relic of the past. Many will experience 'gig economy' roles, periods of unemployment, or switch careers many times. This variability means their retirement savings journey will likely be interrupted and less structured.

Delaying saving for retirement a few years comes at a significant cost, largely due to missing out on the power of compound interest. Starting to save at age 25 versus 35 can result in a significant difference in the sum that’s available in a final retirement pot, assuming the same contribution amount. The single greatest risk younger generations face with retirement is exactly this: sacrificing decades of compounding growth impossible to recover later. Longer lifespans also mean savings need to stretch further, potentially requiring a 30-year reserve instead of 20.

The financial world is complex, filled with acronyms, legal jargon, and what can feel like an overwhelming number of investment choices – especially for a young person trying to balance debt, career growth, and immediate expenses. For them, figuring out what the best and most tax-efficient investment vehicle is between a retirement annuity or a tax-free savings account, and understanding long-term savings strategies, can be overwhelming. 

This is where a financial adviser adds value. Guiding you past the jargon to investment vehicles that align with your risk profile and long-term goals, including those for retirement, a financial adviser assists you in creating a savings roadmap that is disciplined, yet flexible enough to handle life's curveballs.

A financial adviser can also help you establish flexible, goal-based strategies that can adapt as your life changes, ensuring security and choice when you exit the workforce. They help define what retirement looks like for you, whether it's travel, supporting grandchildren, or simply maintaining your current lifestyle.

But here’s the catch. Securing financial independence later in life requires more than good intentions. To achieve success in retirement is a science, one of focus and taking responsibility, that also requires robust technology, deep expertise, and a network of support. That is why it is important to partner with a financial adviser early for personalised, informed advice to build resilient and future-proof retirement plans that are as dynamic as your life.

In closing, the best time to secure your financial future was yesterday. The next best time is now, because success favours the focused.

* Nel is the head of financial planning and advice at Momentum.

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