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While 91% of working young South Africans have savings goals and understand the importance of financial planning, rising living costs, debt pressures and family responsibilities are making it increasingly difficult for the majority to do so, according to new research by Old Mutual.In a preview of its Savings & Investment Monitor, published every July to mark national savings month, the financial services group said only 46% of surveyed working Gen Z respondents aged 18-29 saved regularly, down 11% from 2025.More than half (56%) dipped into their savings to cover daily expenses, a 10% increase from last year, while 36% reported experiencing financial stress, up from 29% in 2025. Nearly one in four (22%) have taken out loans to fund everyday expenses.The survey — whose full results, incorporating the broader population, will be published later this month — finds that 43% of Gen Zs belong to the “sandwich generation”, supporting both younger and older family members financially.It says building emergency funds is a top five financial priority among these youth, but this is tempered by rising financial stress (from 29% to 36%) and slowing income growth.The percentage of young people earning more than they did a year ago declined to 51% in 2026 from 55% in 2025, contributing to an erosion of savings that highlights the growing struggle between long-term goals and immediate needs.“Generation Z is often seen as financially impulsive, but our research reveals a more complex picture. Young South Africans understand why saving and planning matter. However, ongoing economic pressure is leading many to prioritise today’s needs over tomorrow’s goals,” Old Mutual group head of financial education John Manyike said.Read: Inflation expectations trend higher over Middle East warRecent data has highlighted how South African consumers as a whole, hit by rising living costs, are being increasingly forced this year to prioritise short-term financial needs at the expense of setting money aside for their long-term security.Though the latest quarterly bulletin of the South African Reserve Bank showed the national saving rate ticked up slightly to 14.9% of GDP in the first quarter of this year from 13.3% in the fourth quarter of 2025, analysts believe this is likely to dip in the second quarter as rising living costs take their toll.Many households generally have a savings account for emergencies, but longer-term retirement planning tends to fall short, according to Ifsa Asset Managers CEO Frikkie van Loggerenberg.“For South Africans in general, there is a bit of a lack of a savings culture. Everybody tries, but there’s not that 100% commitment to get to that point, and there’s not enough focus or commitment to retirement planning,” he told Business Day.“On the other hand, there is this economic pressure where things are getting more and more expensive each day, and people are battling. The income is battling to keep abreast with inflation.”Van Loggerenberg is a critic of the two-pot system introduced in September 2024 to allow policy holders limited access to their retirement money for emergencies.The government and other proponents say the system has been effective in preventing those in financial distress from resigning from their jobs to gain access to their entire retirement savings, while at the same time securing the preservation of funds in the retirement pot, which cannot be accessed until retirement.By end-February, the South African Revenue Service had approved R79.3bn for withdrawal from the savings pots, with a total of 5.6-million people applying for tax directives for their withdrawals.Critics, however, say the overall impact has been to reduce the amount of money policyholders will have saved by retirement.“On the research that we’ve done, if you have access to that [savings pot], each and every year you will use that up. It’s a fact of life, and you get into that routine to do it. So that makes a huge impact on your long-term retirement savings that the money is there for,” Van Loggerenberg said.“I don’t think it was a good decision. I think that retirement money should stay retirement money and you should not have access to that till the day that you actually retire. That would alleviate a lot of the symptomatic problems that we’ve got, where only 6% of people that are retiring actually have enough for retirement.”He was referring to 10X Investments’ 2023/24 investments retirement reality report, which showed that only about 6% of South Africans are on track to retire comfortably.“The rest have to keep on working, or they rely on their children to take care of them. So then that legacy just keeps kicking the can forward, and I would like to see South Africa break that cycle,” Van Loggerenberg added.
