Millennials need to save more — and more than their parents did
Millennials are in danger of making worse mistakes than their parents did when it comes to investments and planning for retirement. A recent survey by 10X Investments revealed the gloomy reality about saving habits of young South Africans.
The survey‚ of 2‚200 respondents‚ aimed to gain insight into the financial behaviour of young South Africans‚ specifically targeting the country’s economically active population.
Millennials in the research have been categorised as individuals between the ages of 25 and 35. The research shows they are not saving enough and are worse at saving compared to their parents, with only 35% of them investing for the long term.
10X CEO Steven Nathan said that with only 6% of South Africans able to retire comfortably‚ retirement remains a crisis in the country. "Young people are not saving enough and this hasn’t changed in the last 25 years. Younger people would rather have a bigger take-home salary than [make] a higher contribution into their savings or retirement funds‚" he said.
The research also shows that, when compared to their parents‚ millennials are saving more towards educating their children and leaving an inheritance to their children. It also shows that only 44% of millennials trust the retirement investment industry and that 57% of respondents want to retire before the age of 65.
In the digital age, millennials are, not surprisingly, looking for information regarding financial investments online. "Millennial turn to the internet for independent information on how to invest their money and plan for their futures‚" said Nathan.
He also highlighted the importance of not cashing out pension and provident funds when changing jobs‚ saying it was risky and damaging to one’s retirement stability.
"Individuals need to take charge of their lives and their retirement because nobody cares about your money more than you do‚" said 10X head of retail Emma Heap.
Nathan also said it is important for individuals to know how much fees they are paying to service providers because it has an effect on their long-term investment returns.