South Africa’s youth face retirement crisis, small savings could be the lifeline

With alarmingly high levels of youth unemployment, at almost 50%, there is a very real concern that South Africa’s future generation can’t save at all, if retire comfortably.

Salem Nyati, consumer financial education specialist at Momentum Group, says the clear reality is that “many young people have little or no income to save”.

The low savings rate among youth has serious long-term consequences, says Nyati. “If today’s young people are unable to build even a small nest egg, we face a future where millions may reach retirement age without adequate resources,” she says.

Nyati adds that the low savings rate, coupled with high unemployment, will place additional strain on the national fiscus and social support systems, which are already under pressure. “In 40 years, this could result in a generation heavily reliant on government support, with fewer contributors to the tax base and greater pressure on those who are working,” she says.

The South African Reserve Bank indicates that household savings remain low, at around 0.5% of gross domestic product, Tando Ngibe, senior manager at Budget Insurance, points out.

By around 2065, when today’s 20-year-olds retire, South Africa’s pension system could face a shortfall, especially if social grant demand rises, says Ngibe.

Ngibe says that for youth, this translates to limited financial cushions, increasing reliance on social grants or family support in crises. “The long-term implications are stark. Without savings, today’s youth may face retirement with inadequate resources, placing pressure on an already strained fiscus,” Ngibe says.

In the 2025/26 National Budget, National Treasury anticipates spending some R117 billion on old-age grants. This is 4.5% of a R2.2 trillion budget overall, which also seeks to cater for health care, education, and other socio-economic imperatives.

The sixth edition of the 10X Investments Retirement Reality Report 2023/2024 found that only 6% of the country’s population is on track to retire comfortably.

However, Nyati says the solution is not to abandon all hope, but rather to “reframe how we think about financial education and opportunity”. Ngibe concurs, stating that “building a savings habit early, even in small amounts, compounds over time and reduces future dependency”.

Nyati says the first step is to take any small amount of cash and invest it, which is a discipline that, even in tough times, “sets the foundation for financial resilience and future prosperity”.

“South Africa needs real opportunities for youth employment, alongside accessible financial education and innovative savings solutions. Practical tools such as micro-savings accounts, goal-based savings apps, and incentives for starting to save early can help bridge the gap, even for those with irregular or low incomes,” says Nyati.

Sibongile Maputla, who launched Squirrel Away in May, says that she wants children in South Africa to “grow up knowing they have a stake in the future. That wealth is for everybody, and that compound interest is not an abstract or complex concept, but something that belongs to them.”

Maputla says, “If one child opens an investment statement at 18 and sees that their village believed in them, that’s the legacy”.

Nyati adds that, although job creation remains the ultimate solution, embedding a culture of saving, however small, in young South Africans today is essential. “This not only builds individual financial security but also protects the economic stability of our country for generations to come,” she says.

Niresh Gopichand, risk director at Atlas Finance, notes that there is no doubt that unemployment, rising debt, and limited access to quality financial education are systemic economic barriers. Yet, he says that a growing number of financial educators believe that internal beliefs about money are just as critical.

“In the same way that past generations challenged political systems, today’s youth must challenge the limiting beliefs that hold them back financially,” says Gopichand.

A shift in mindset can start small. Saving just R10 a week, building awareness around spending, or learning a financial term can change not only a bank balance but a young person’s confidence, Atlas Finance says. According to Gopichand, “money is emotional, and until we deal with how we think and feel about it, we won’t manage it well, no matter how much we earn”.

Gopichand calls for normalising talking about money in youth spaces as something that can be managed and mastered,” adds Gopichand. “When we stop treating money as a mystery or a source of shame, we give young people the tools to build real freedom,” he adds.

Financially informed youth are better positioned to support their families, contribute to local economies, and make informed choices about education, employment, and entrepreneurship, notes Atlas Finance.

Ngibe adds that there are practical steps that young people can adopt to build a savings habit, even in tough economic conditions. “These steps not only foster financial resilience but also mitigate the long-term strain on the fiscus when today’s youth reach retirement age.”

These steps include:

• Leveraging small income streams: Many young people engage in informal or gig-economy activities, such as freelancing, tutoring, or selling goods online. Allocating even a small portion of irregular earnings to savings can build a foundation.
• Exploring community-based savings: Stokvels, a cultural cornerstone in South Africa, provide a collective saving mechanism. Joining or forming a youth-focused stokvel can encourage disciplined saving, with peer accountability ensuring contributions. These funds can grow modestly while being accessible for emergencies or future investments
• Upskilling for income opportunities: Investing time in free or low-cost online courses can enhance employability or entrepreneurial skills. This indirectly supports savings by increasing earning potential, allowing youth to set aside funds sooner.

“In a country where youth carry the potential to reshape the future, building a financially literate generation is not just a personal goal, it's a national imperative,” adds Gopichand.

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