BUSINESS NEWS - South Africa’s ageing population is growing rapidly, but the country’s approach to retirement planning may not be keeping pace.

Statistics South Africa’s latest healthy ageing report shows that the number of people aged 60 and older increased from 3.6 million in 2002 to 6.6 million in 2025. Their share of the population has also increased from 7.7% to 10.5%.

For Barry Kaganson, CEO of Auria Senior Living, this demographic shift requires a fundamental rethink of how South Africans prepare financially for their later years.

“People are reaching their later years in better health than any generation before them. That is a triumph,” says Kaganson.

“But our retirement planning has not caught up with the fact that people are living longer.”

The retirement savings problem

The challenge is made more serious by South Africa’s poor retirement savings record.

According to the 10X Retirement Reality Report, only 6% of South Africans are on track to retire comfortably. The report also found that many people either have no formal retirement plan or are uncertain about whether their existing plan will be enough.

Kaganson argues that traditional retirement planning often relies on an outdated assumption that people will need their retirement savings for only 12 to 15 years.

“The industry keeps printing brochures with silver-haired couples on golf courses at 60,” he says.

“Yet the reality is that people may need to fund another 30 or even 35 years of life.”

Retirement age is no longer the whole story

Rather than focusing solely on a retirement date, Kaganson believes South Africans should focus on how they will fund the decades that follow.

Someone retiring at 65, for example, should test their financial plan against a 30-year horizon, rather than assuming their money will need to last only 15 years.

“A plan built for 15 years and stretched across 30 fails at the worst possible moment, when earning capacity is gone and options have collapsed,” he says.

The costs of ageing also need to be considered.

Long-term care, frail care and conditions such as dementia can become significant expenses during later life. Kaganson says these costs should form part of retirement planning from the outset, rather than being treated as unexpected expenses.

“A plan that budgets for holidays and hobbies but skips frail care has misread where the real costs of a long life sit,” he says.

Senior living becomes part of the conversation

The longer people live, the greater the need for housing and care models that can provide security throughout later life.

Kaganson points to the growth of senior living investment internationally as evidence of the changing market.

He believes Life Right continuing care communities could play a greater role in South Africa, offering residents the lifelong legal right to live in a home while the operator retains ownership and responsibility for its upkeep.

The model, he says, can provide residents with greater financial predictability while addressing some of the costs and risks associated with ageing.

The earlier, the better

Kaganson's advice to South Africans is straightforward: start planning as early as possible.

Waiting until retirement is approaching can leave people with limited options to address a financial shortfall.

“Waiting until the shortfall is undeniable converts a planning exercise into a crisis, and crises at 75 offer very few exits,” he says.

His recommendation is for South Africans to take their current retirement plan and test whether it could realistically support them for 30 years or more.

“If it holds, you sit in a fortunate minority of roughly 6% of the country,” says Kaganson.

“If it does not, then you must buy yourself the one asset longevity planning values above all others – time to do something about it.”

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