Healthy yuppies likely to outlive their pensions
Actuaries are underestimating the longevity of South Africans when creating retirement plans. This means that people are outliving their retirement savings.This is the opinion of actuary Viresh Maharaj, speaking at the launch of the Sanlam benchmark employee benefit survey in Johannesburg yesterday.The company surveyed 1000 brokers, pensioners and workers.Despite people living longer than ever before, South Africans continue to retire young, with 25% of those surveyed retiring before 60.Maharaj said the product developers who designed retirement savings plans knew people were living longer but didn't realise just how fast medical technology and new treatments were increasing lifespan."Longevity is the greatest threat to people's retirement savings," said Maharaj.From 1950 to 2015 global life expectancy increased by 20 years, according to the UN, said Maharaj.Because so many people are living longer and having fewer children to look after them, the World Economic Forum set up the Global Agenda Council on Ageing to find solutions for society.The council said: "Over the next four decades rapid ageing of populations will be one of the most powerful transformative forces affecting society."The proportion of people over 65 around the globe is currently 10% but it is expected to jump to 22% by 2050."South Africans' saving habits for retirement have not changed to meet the demands of their longer lives.The Sanlam survey found that independent financial advisors believed the biggest mistakes their 45- to 55-year-old clients madewhen saving for retirement was not understanding how long they would live and just how much money they would need.Mayuri Reddy, Sanlam's marketing strategist, said people were exercising, losing weight and eating better but did not take into account that this might increase their longevity and require them to save more.One way to have enough money in old age is to retire later, she said. "If a person earning R300000 a year has R1-million saved in his retirement funds at 60, and works for another six years and puts 13% of their salary away, their retirement payout will double."Working till 70 can triple the value of retirement payout that they would receive at 60," she said.