What if my partner is not saving enough for retirement?

Feel free to reach out to PSG Wealth adviser  Bernice Barnard directly.

WHY SOME PEOPLE OVERLOOK RETIREMENT SAVINGS

Several factors contribute to the perception that saving for retirement is not as urgent as other financial priorities. Many South Africans face immediate financial challenges that take precedence over long-term financial planning. High living costs, debt accumulation and a lack of financial education can divert attention from retirement savings.

Other individuals may have the means to save for retirement but cannot bring themselves to save money in an investment vehicle that limits access until they reach retirement age.  Instead, they save money in a more accessible product and face challenges in managing and sustaining those savings without self-restraint.

Cultural factors may also play a role, with some individuals relying on the tradition of familial support in old age rather than building personal retirement funds. Additionally, there may be a perception that the government will adequately cater towards their financial needs, leading to a complacent attitude towards personal retirement planning.

THE IMPLICATIONS

The implications of insufficient retirement savings in South Africa are far-reaching. A major portion of the South African population faces the risk of experiencing financial strain in their later years, relying solely on government social grants that most certainly are not sufficient for a comfortable retirement. This situation not only impacts individuals but also places a burden on social welfare systems, leading to increased pressure on already strained resources.

Moreover, the lack of personal retirement savings limits the ability to enjoy one’s retirement years fully. Without adequate funds, individuals may have to compromise on lifestyle choices, healthcare, and leisure activities, leading to a diminished quality of life.

FINANCIAL ADVICE

Engaging with a financial adviser is a fundamental step in addressing insufficient retirement provision. Financial advisers can shed light on critical aspects that can illustrate the severity of your situation. One key metric is the retirement savings gap between your combined current retirement savings trajectory and the capital required for a comfortable retirement based on your current lifestyle. By assessing this gap, your partner will hopefully comprehend the urgency of ramping up their retirement savings efforts.

Additionally, a financial adviser can evaluate the impact of inflation on future expenses and income, helping individuals understand the purchasing power of their savings over time. They can also provide insights into the appropriate asset allocation and available investment strategies to optimise returns while managing risk within your risk profile at various life stages. Your priorities will change as you age, so meeting with your financial adviser regularly is essential to ensure you and your partner stay on track.

WHILE YOU STILL HAVE TIME

 Prioritise building a solid financial foundation as a unit. Team up with your partner to create a budget, reduce debt and establish your savings vehicles as early as possible. If your employer does not have a retirement benefit structure in place, consult with your financial adviser to establish how much you need to save in a retirement annuity to ensure a comfortable retirement, and be sure to assess your savings at least once a year to compensate for salary increases or any possible changes in your circumstances.

Overlooking retirement planning not only jeopardises your financial future but can also place undue stress on your partner. Financial harmony is crucial in a relationship, and an inadequate financial foundation can strain even the strongest of bonds. If one partner has not made sufficient provision for retirement, the burden may fall on the other, potentially leading to resentment, stress, and strained relationships. It may also lead to an uneven distribution of financial resources during retirement. Addressing the discrepancy early on is essential to ensure a harmonious and secure financial future for both partners.