Is 80 the New Benchmark for Retirement? Exploring the Shifting Age of Financial Independence

BY DAKALO NEKHUMBE
Mar 25
2 min read

The idea of working well into your 80s with gray hairs, knees that crack each time you walk and eyes so near-sighted you squint when you look at your computer is a strange idea, but Sanlam Corporate’s recent study suggests that 80 may be the new retirement age. The findings, based on data from over 300 000 Sanlam Umbrella Fund members, as well as demographic trends, actuarial insights, and key economic factors, highlight the evolving landscape of retirement in South Africa.

Sanlam Corporate’s CEO Kanyisa Mkhize notes that while the official retirement age remains 65, the majority of South Africans cannot afford to retire at that age. The reality is that the average South African will not have saved enough to maintain their lifestyle according to the industry benchmark.

5Factors Affecting Delayed Retirement:

10X published a Retirement Reality Report that finds that most South Africans do not plan for their retirement.

The report findings include 29% of people over 50 who admit to not having their retirement plans on track.

The report reveals that individuals who do not save for retirement don’t because they do not have the means to save.

Individuals at age 50 would need to allocate approximately 60% of their income to secure a comfortable retirement. However, this goal becomes unattainable given projected investment returns of 9,25% per annum and an inflation and salary escalation rate of 5,25% per annum.

Studies show that the highest employment absorption rates are seen among individuals aged between 25 - 34 years old. Depending on the age an individual is employed they could have a smaller window to save for their retirement.

Based on these findings, Mkhize says that people would need an additional 15 years to achieve the financial security required for good retirement.

The Future Implications of 80 As The Retirement Age

Retirement at 80 would have significant implications that would affect all working people. Some of these implications are:

Beyond managing their health in their 70s, individuals will need to prioritize employability and continuous skills development to remain competitive in the job market.
Sanlam Corporate’s data shows an emphasis on the growing tensions that will exist between retaining those who are older and as a result more experienced in their jobs and creating job opportunities for the young and inexperienced.
With a youth unemployment rate as high as 45.5% currently, young South Africans will face an even greater competition for jobs as people dawdling towards 80 retain their jobs.
As a result many individuals will delay saving for their retirement. However, the later someone begins to save for retirement the greater the amount they would have to save.

The idea of people working until they are 80 is mind-boggling to consider, but this brings attention to how important it is to consider saving for the future because once you retire you really cannot go back to a younger age or even continue working because your limits prevent you.