Only 6% of South Africans expect a comfortable retirement, as studies reveal low savings, poor understanding, and rising medical costs.

South Africans are worried – and for good reason. Recent national studies show a clear trend: most South Africans fear they won’t retire comfortably, don’t know how much they’ll need, and are anxious about rising medical costs and the new two-pot withdrawal system.

According to the 10X Retirement Reality Report 2024, only about 6% of people expect a comfortable retirement. The Sanlam Benchmark Survey 2025 found that less than half of members believe they’re on track, and nearly half admit they don’t understand their options when they reach retirement. The Old Mutual Savings & Investment Monitor paints the same picture, strong saving intent, weak follow-through.

So, what are the biggest questions people are asking, and what does the evidence say?

‘How much do I need to retire in South Africa?’

Start with a replacement ratio of 70%-80% of your final salary to maintain your lifestyle. More important, focus on drawdown rate, the percentage of capital you withdraw each year. Industry data from Asisa [Association for Savings and Investment South Africa] shows the average living annuity drawdown is about 5.6%, still too high for many retirees if inflation runs above 6%.

Independent research and The Ultimate Guide to Retirement in South Africa (3rd Edition) both stress a 4%-5% drawdown as the long-term “safe zone”. Anything higher accelerates capital depletion and the risk of running out of money in your 80s or 90s.

‘What about medical inflation and healthcare costs?’

Medical inflation consistently outpaces CPI by 3%-5% a year. Discovery Health and other medical schemes confirm that retirees spend an ever-growing share of income on premiums, gap cover, and chronic-care costs. Yet many South Africans downgrade or cancel medical aid in retirement, precisely when they need it most.

Plan for CPI + 3%-5% inflation on medical expenses and ring-fence a dedicated healthcare reserve.

‘Should I use my two-pot withdrawal?’

The two-pot system went live in September 2024, and South Africans withdrew over R4 billion within the first 10 days. While this offers short-term relief, it reduces long-term retirement capital and compounds the savings gap. Use it only for genuine emergencies and always rebuild contributions afterward.

‘Which annuity is best – living, guaranteed, or hybrid?’

A living annuity offers flexibility but exposes you to market risk; a guaranteed life or with-profit annuity offers security but less flexibility. The emerging trend, supported by leading research and by The Ultimate Guide to Retirement in South Africa (3rd Edition), is the hybrid annuity: securing a guaranteed income floor for essentials while keeping a growth portfolio for discretionary spending. This approach reduces longevity and sequence-of-returns risk.

‘Are low fees always better than advice?’

Low fees help, but context matters more. Product-only solutions may appear cheaper, yet exclude the value of professional guidance, proper product selection, tax structuring, behavioural coaching, and long-term drawdown management. Global studies (Morningstar Gamma, Vanguard Advisor’s Alpha) show advice adds 1.5%-2% a year in sustainable value, often far exceeding marginal fee differences.

What about supporting family and debt?

Sanlam’s data shows half of South Africans have withdrawn from retirement savings early, often to support dependants or pay debt. The cure: automate contribution increases as debts fall and commit to preserving retirement funds when changing jobs.

Retirement success isn’t about hitting a single number, it’s about creating a flexible, inflation-aware plan that integrates income, healthcare, and behaviour.

 

Article credit: https://www.moneyweb.co.za/financial-advisor-views/the-questions-south-africans-are-asking-about-retirement-and-what-the-evidence-says/