Longevity has huge impact
THE traditional concept of retirement could become redundant because of longevity, and it was therefore important for people to make adequate provision for the next phase in their lives when reaching the traditional retirement age of 65.
This was said by Sanlam Employee Benefits chief executive Dawie de Villiers when he addressed delegates at the Benchmark Symposium 2014 in Port Elizabeth yesterday.
Speaking on the theme of the annual Benchmark Survey, "Retire Another Day", he said people should prepare themselves for the choice to retire when they wanted to, instead of what was traditionally dictated to them.
De Villiers said it was important for people to realise the importance of saving for retirement. Instead of it being a grudge purchase, "saving for retirement needs to become more sexy – it needs to become more attractive for the youth".
"People should stand around the braai talking about savings, and how they are looking after their finances," he said.
Sanlam Employee Benefits chief marketing actuary Viresh Maharaj said the human lifespan had increased dramatically since 1950 due to advances in medical technology and that the retirement industry played a critical role to remain relevant.
He said South Africa had a bifurcated society where longevity only affected the middle class and up. Due to HIV/Aids, the average life expectancy in the country was 50, but this could change with the correct use of ARVs.
Maharaj said studies found that ARVs could prolong the life of someone living with HIV while having access to prime medical care to within three years of an HIV-negative person.
Apart from financial planning for a longer life after retirement, some retirees, referred to as "the sandwich generation", were also often burdened with the added responsibility of taking care of either their adult children or dependent children.
"We are calling on South Africans to delay retirement. For example, if they delay their retirement by six years, their nest-egg could double, and if they delay retirement by 10 years, their nest-egg could triple."
Maharaj said by having such a phased retirement and taking up a second career, people who delayed their retirement and remained in the workplace not only comfortably provided for their actual retirement, but could also benefit the companies they worked for by providing mentorship to the younger generation of employees with the transferring of skills and knowledge.
"However, the survey found that most employers are actually reducing the retirement age of their workers. Half of the pensioners polled said they took early retirement packages," he said.
The survey found that 46% of the respondents retired between the ages of 56 and 60 and many did not realise how that affected their pension amount.
To top it all, pensioners surveyed did not take into account the medical expenses that would increase after retirement, Sanlam Employee Benefits actuarial specialist Mayuri Reddy said.
"Of the pensioners interviewed in the survey, 60% had a shortfall between their income and expenses, 32% had debt in retirement, 42% said their retirement income did not cover their medical expenses and 38% had depleted their lump sum," he said. - Cindy Preller
