Time for change: Most black people don't save for their retirement

Time for change: Most black people don't save for their retirement

- A new study shows that many black people South Africans are not saving for retirement

- However, the study shows that many people who lack traditional financial literacy still have an understanding of the importance of saving

- The study recommends better financial literacy education and more understanding from financial advisers

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Evidence suggests that most black South Africans do save money, but not for retirement.

Instead, often money is put away for unexpected costs like funerals, which can be up to several times an individual's monthly income.

A new study has found that two factors are important in increasing people's likelihood of saving for retirement: financial literacy and personal savings.

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The study was conducted by Bomikazi Zeka at the University of Canberra, and surveyed 130 people living in the Eastern Cape. All of the people interviewed believed that saving was necessary, but few had concrete plans in place to do so.

Many just assumed they would have enough money when the time for retirement came.

This fits with previous studies done on financial literacy. Financial literacy refers to a person's understanding of financial concepts. Research knows that people with less financial literacy tend to save less, and this was the case in the Eastern Cape study as well.

However, the study that people who lacked traditional literacy still understood the importance of saving and made plans to save - challenging some previously held assumptions about how to get people to save better.

Additionally,the study found that many low income South Africans are still able to save adequately for retirement, as long as they save carefully and continuously from early on in their working life.

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The take away from the study was that financial advisers need to better understand how people without traditional financial literacy think about saving. Additionally, and crucially, financial literacy needs to be taught from an early age, to give South Africans the skills needed to achieve financial independence.

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Source: Briefly.co.za

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