Are South Africans waiting too long to plan for retirement? The latest Sanlam Benchmark Survey reveals alarming trends in retirement readiness, highlighting the need for early financial planning.
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South Africans understand the importance of planning for retirement early, yet many are leaving critical financial decisions until the final years of their working lives. This is one of the key findings from the 45th Sanlam Benchmark Survey, released this week, which reveals a significant gap between when South Africans believe they should start preparing for retirement and when they actually take action.
According to the research, South Africans believe retirement planning should begin at around age 35. In reality, however, retirement fund members only begin actively engaging with their retirement savings an average of 3.4 years before retirement, while many seek professional financial advice just 20 months before leaving the workforce.
The Sanlam Benchmark, the 2026 edition, surveyed 76 standalone retirement funds, 130 umbrella fund employers, 30 pensioners who retired four to five years ago, and 600 consumers, comprising employed individuals, people approaching retirement, and retirees. The findings draw on two separate studies conducted by research houses BRDC and Alltold.
The results point to a concerning reality: by the time many South Africans begin focusing seriously on retirement planning, many of the decisions that determine long-term financial outcomes have already been made.
Kanyisa Mkhize, chief executive officer of Sanlam Corporate, says retirement readiness cannot be achieved through last-minute interventions.
“Retirement planning also does not stop when someone leaves work. The first few years after retirement are critical, because that is when a lifetime of savings is tested against the reality of living costs, healthcare needs, and longevity.”
The survey highlights the cumulative impact of financial decisions made throughout a person's career. Choices such as preserving retirement savings when changing jobs, increasing contributions over time, managing debt responsibly, and seeking professional financial guidance all play a significant role in determining retirement outcomes.
Mkhize says, “The Sanlam Benchmark tells us that people understand when they should start planning, but the reality is that many are making retirement decisions in a very difficult economic environment. As an industry, we must recognise the financial pressure many members are under. We need to work together with employers and advisers to help members plan earlier, access better advice, preserve more of their savings, and increase contributions where they can.”
The research paints two distinctly different pictures of retirement in South Africa.
For working South Africans, retirement planning often competes with immediate financial pressures. Rising living costs, career changes, debt obligations, and family responsibilities make long-term saving increasingly difficult.
For retirees, however, the consequences of earlier financial decisions become much more apparent. The survey shows that pensioners who choose to take a cash lump sum at retirement now exhaust those funds within an average of just 14.6 months. This represents a sharp decline from the average of 30 months recorded between 2011 and 2016.
Within four to five years of retirement:
Half of retirees are unable to maintain their pre-retirement standard of living.
One in three experiences financial strain.
Nearly half (47%) continue carrying debt into retirement.
Healthcare costs have emerged as another major challenge. While one-third of retirees remain on the same level of private medical cover after retirement, 44% have either downgraded their medical aid or exited the private healthcare system entirely in favour of state healthcare services.
These findings underscore the growing financial pressures facing retirees and the importance of adequate planning long before retirement approaches.
The 2026 Benchmark Survey also challenges several long-held assumptions about different generations of South Africans and their attitudes towards retirement.
Young South Africans, who are often characterised as more willing to take financial risks, are increasingly prioritising certainty and security. Nearly nine out of ten younger respondents indicated that they would prefer a guaranteed retirement income over the possibility of achieving higher investment returns through greater risk-taking.
At the same time, many younger workers are navigating career disruptions, debt burdens, and short-term financial pressures that limit their ability to save consistently for retirement.
Generation X, comprising individuals aged 46 to 61, faces a different set of challenges. Traditionally regarded as being in their peak earning years, many are now experiencing some of the country's greatest financial pressure. Members of this generation are frequently supporting both dependent children and ageing parents while simultaneously trying to prepare for their own retirement, often while carrying substantial debt.
Retirement itself is also changing. Today's retirees are increasingly active, connected, and economically engaged. The survey found that 60% supplement their retirement income through alternative sources, up from 47% in 2024. More than 90% regularly use digital platforms and online banking services.
"The old assumptions about age no longer hold. Young people are looking for certainty, people in mid-life are under unprecedented financial pressure, and many retirees continue working because they need to. Retirement planning has to reflect the way South Africans actually live today, not the way they lived twenty years ago,"says Mkhize.
The Benchmark also reflects on the significant evolution of South Africa's retirement industry over the past two decades.
The sector has undergone substantial consolidation, resulting in fewer but stronger standalone retirement funds, lower administration costs, and improved governance standards.
One of the most significant recent developments has been the introduction of the Two-Pot Retirement System, which has fundamentally changed how members interact with their retirement savings. The survey found that 84% of standalone funds and 80% of umbrella funds have experienced increased member engagement since the system's implementation.
Anna Siwiak, head of product development at Sanlam Umbrella Solutions, believes this increased engagement presents an important opportunity.
"People are paying more attention to their retirement savings than they have in years. Our challenge now is to help them use those moments of engagement to make better long-term decisions - not only when they need to access money, but throughout their working lives."
The research highlights retirement contributions as one of the most significant opportunities to improve long-term outcomes.
Average contribution rates in umbrella funds currently stand at 14.09% of pensionable salary, comprising 8.00% employer contributions and 6.09% employee contributions. In standalone funds, average contributions are higher at 17.44%, consisting of 10.69% employer contributions and 6.75% employee contributions.
Both figures remain well below South Africa's maximum tax-deductible retirement contribution level of 27.5% of taxable income.
While acknowledging that many South Africans cannot immediately increase contributions to this level, Siwiak notes that small, gradual increases can have a meaningful long-term impact. Increasing retirement savings by just one or two percentage points as salaries rise can significantly improve retirement outcomes over time.
“Affording even small increases in contributions can be a challenge, especially in today’s economic climate. That is why a robust retirement strategy, anchored in career-long financial advice, is so critical. Advice is not a one-off event at retirement - it is the ongoing guidance that helps members preserve savings when they change jobs, manage debt before it spirals, and make confident choices about healthcare and longevity. When advice is embedded across the member journey, even modest contribution increases become part of a stronger, more resilient financial plan,” says Siwiak.
The survey also identifies preservation of retirement savings as one of the most powerful levers available to improve retirement outcomes.
Although 26% of retirement funds and 19% of umbrella sub-funds reported improvements in preservation behaviour following the introduction of the Two-Pot system, most remain concerned that members continue to withdraw their retirement savings when changing jobs rather than preserving them for the future.
According to Siwiak, many employees are still presented with withdrawal forms rather than meaningful financial guidance at what is often one of the most important financial decision points in their lives.
Improving preservation rates, alongside encouraging higher contribution levels and earlier financial planning, could substantially strengthen retirement outcomes for future generations of South Africans.
The theme of this year's Benchmark Survey, Confidence Through the Ages, reflects a central conclusion that runs throughout the research: retirement confidence is not built in the final years before retirement, nor does it end when a person leaves the workforce.
Rather, it is developed and protected through a series of financial decisions made throughout an individual's lifetime.
"The conversation about retirement should begin around age 35 because that's when time is still your greatest asset. But it shouldn't stop at retirement either. The first years of retirement are just as important, because that's when decades of planning are put to the test," says Mkhize.
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