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South African consumers hard hit by rising living costs are this year being increasingly forced to prioritise short-term financial needs at the expense of setting money aside for their long-term security, in a country where the savings rate has always been too low to begin with.In its latest quarterly bulletin, published last week, the South African Reserve Bank said the national saving rate — gross saving as a percentage of nominal GDP — ticked up only slightly to 14.9% in the first three months of this year from 13.3% in the fourth quarter of 2025.This was before the Middle East conflict sent the cost of living and doing business spiralling and the savings rate is likely to weaken in the second quarter, analysts said.“Given the financial stress that most South Africans are currently under, one can assume that the state of savings has actually deteriorated,” said financial expert Gerald Mwandiambira, the former CEO of the South African Savings Institute (Sasi).Founded in 2001 as a public-private initiative to promote a savings culture in the country, Sasi has for two decades spearheaded an annual savings campaign during July — dubbed Savings Month — but was forced to shut its doors about two years ago due to a lack of funding and sponsors.“Part of the reason that the Savings Institute lost its impact was because the message to save was received and heard, but that message is predominantly for employees who receive regular income,” Mwandiambira told Business Day, adding that high levels of household indebtedness is also a deterrent.According to a recent study by Debt Rescue, nearly half of consumers would experience severe financial pressure and struggle to manage if the Bank were to raise interest rates further after the 25 basis point increase in May.“The unfortunate mindset is that most people believe they can only start saving when they have no debt. It shouldn’t be the case. We need to continue to encourage people to save and income can even be your government grant, there’s no such thing as earning too little to save,” Mwandiambira said.According to 10X Investments’ 2023/24 investments retirement reality report, only about 6% of South Africans are on track to retire comfortably, pointing to a looming crisis of more pensioners that will require state grants to survive.The report found the few South Africans who have planned for retirement are not confident they can support themselves for the long term considering inflationary pressures and the economic climate.Significantly, 29% of people aged over 50 indicated that their plans were “definitely not” or “probably not” on track. According to 10X, it is extremely difficult to correct any deficit in savings after reaching 50 and requires at least 30%-40% of a monthly salary to be invested into retirement savings in order to comfortably retire.A worrying trend is that for many South Africans, saving traditionally entails building emergency funds and reducing debt — short-term financial goals — at the expense of retirement planning, IFSA Asset Managers said in a statement.“Savings month is a vital conversation for South Africa, but we cannot afford to stop at emergency savings,” CEO Frikkie van Loggerenberg said.“Every rand saved for a rainy day is important, but saving for retirement is saving for your future dignity. The statistics are sobering and the window to act is narrowing for millions of South Africans.”IFSA Asset Managers cites the latest data from Stats SA, showing the household savings rate turned negative in 2025, dropping to minus 1.2% in the third quarter from minus 1.1% in the second. This means South African households are, on average, spending more than they earn, funding consumption through debt and dipping into existing savings rather than building new ones.It notes the government safety net offers little support for those without adequate retirement savings. The South African Social Security Agency grant for beneficiaries aged 60 to 74 years is presently R2,400 a month and R2,420 for those aged 75 years and older.“For the majority of South Africans, this is not a retirement income. It is a lifeline,” IFSA Asset Managers said.
