The retirement age in South Africa is currently 60. However, when you look at notable countries around the world, you’ll see many are higher than that. As such, experts believe increasing the retirement age in South Africa could significantly improve outcomes for many.
According to Old Mutual Corporate, only 9% of South Africans are on track to retire comfortably. This is due to inadequate savings. In fact, the remaining 91% of the population would not be able to survive longer than one year on their savings.
RETIREMENT AGE IN SOUTH AFRICA
Therefore, increasing the retirement age in South Africa would be a relatively simple way to resolve this issue, reports Daily Investor. If South Africans worked longer, they could extend their retirement contribution period and benefit from higher compound interest. South African Social Security Agency Old-Age Grants only start paying out at age 60.
However, pushing eligibility back by even a few years would save government millions in SASSA social welfare payments. Likewise, improvements in modern medicine mean longer life expectancies for the aged. It may sound unpopular, but that’s more time the elderly are draining taxpayer funds.
RETIREMENT AGES AROUND THE WORLD
Below is a list of select countries to help compare the retirement age in South Africa:
- South Africa – 60 years old
- Nigeria – 60 years old
- South Korea – 62 years old (increasing to 65 by 2033)
- Sweden – 64 years old
- France – 64 years old (recently raised from 62 in 2023)
- Spain – 65 years old
- United Kingdom – 66 years old
- United States – 67 years old
- Germany – 67 years old (gradually increasing from 65)
- Japan – 65 years old
- Australia – 67 years old
What you may notice is how most non-emerging countries have a higher retirement age than South Africa. Likewise, even those that are higher will increase again or have recently increased. This is not by accident, but rather by design.
ARGUMENT FOR RAISING RETIREMENT AGE IN SOUTH AFRICA
Because there are sound financial reasons to raise the retirement age in South Africa. “Adding five more working years will lift retirement income massively. By lengthening the contribution period, compound investments grow for longer. This also reduces the number of years savings are drawn, all without increasing member contribution rates.” says Old Mutual Corporate’s Blessing Utete.
At the current retirement age in South Africa, most residents end up having to work longer than expected anyway. They must rely on family for support, or turn to the state through SASSA Grants for an income. In South Africa, the burden to save for retirement is mostly placed on the individual and not on companies or the government.
SAVE EARLY, SAVE A LOT
However, Old Mutual says the best time to start saving for retirement age in South Africa is yesterday. Because the right amount to save is always more than you think. As such, increasing the retirement age is but one step. The next is mandatory participation in a retirement fund for any salaried employee in the country.
Let us know what you think about the plight facing retirees in South Africa. Are residents saving enough for their retirement or are salaries just so low they cannot save enough?
