This is the first in a three-part series in which Momentum Corporate explores the evolving world of work with the latest trends and insights – unveiling how this world is reshaping the expectations and demands of employees.
Contents
Foreword
U npacking the research
Purpose of the research
Methodology and participants
Trends and challenges
U ncertainty: from risk to reward
Disruption at the macro level
Disruption for business
Disruption for the individual
PART 1 Trends & Disruption 01
F oreword
02
What financial advice would you give your younger self right now? Would it be to spend less? Save or invest more? Or perhaps to ask for specialist help so that you make better financial decisions?
As we grow older, and closer to our retirement years, we tend to have many more insights about money based on either wins or losses. And, while time travel is unfortunately not (yet!) possible, there are at least ways to bring our future-self closer to our present, so that we can start making better decisions today.
In this research report, we present retirement trends through the perspectives of key stakeholders across themes of change and disruption, behaviour and psychology, health and wellbeing, purpose and fulfilment and the role that new technology is playing in shaping our modern life.
With change comes disruption. With disruption comes opportunity.
We also unpack the challenges and changes in the employee benefits space affecting our employees, our businesses and our financial advisers, and how these changes are catalysts for opportunity. Importantly, for the first time, we present insights from an often-forgotten group: the retirees themselves. From them, we experience their lessons learnt and the retirement journey first hand.
According to National Treasury, only 6% of South Africans are projected to retire comfortably. With our own FundsAtWork Umbrella Fund reflecting that members will retire with only 35% to 38% of their pre-retirement income, this research helps us to better understand what needs to be done to help members achieve improved savings’ outcomes.
We’ve called this report Future-Proof Finances because our aim at Momentum Corporate is to help you do just that: future-proof yourself and your loved ones with the right financial protection.
I hope you enjoy the insights and that you feel as inspired as we do about embracing disruption and making the right changes now … for a better tomorrow.
Best
Dumo Mbethe Chief Executive Officer, Momentum
Corporate
U npacking the research 03
2024 has been another year of remarkable change, challenge and disruption worldwide. Globally, elections are taking place in countries that are home to almost half of the world’s population, starting with Taiwan’s general election back in January and culminating with the US presidential race in November.
International conflict, rising costs of living, and – closer to home – our own elections, which led to the formation of the Government of National Unity (GNU), have meant that both employers and employees have much to adapt to. This is not to forget other changes such as the implementation of the two-pot retirement system, which significantly shifts the retirement landscape, as well the exponential growth of digital technologies, which is reshaping our business and personal lives. Such a disruptive environment inevitably leads to financial uncertainty, both
for businesses and individuals. But whether this uncertainty presents as a risk or as a sense of reward with new opportunities and experiences, depends on embracing change and disruption.
Our role at Momentum Corporate is to support and protect our clients’ dreams over the course of their financial journeys. As the world around us changes, so do we, as we continue to innovate with the products and services we offer.
This research report, aptly themed Future-Proof Finances, is an annual exercise in understanding what our clients need and how we can provide this.
The purpose of the research
In alignment with our ‘human-first’ approach at Momentum Corporate, we strive to deepen our understanding of our clients by staying updated on their changing financial needs and the circumstances that are most relevant to them.
Through the research, we also aim to showcase our clients’ experiences, both positive and negative, to inspire others to build and protect their overall financial wellbeing into the future. In addition, the valuable insights from the research help us to design and refine our client solutions to achieve better financial outcomes.
Our overall aim?
To use these insights to support us in building and protecting our clients’ financial dreams.
Methodology and participants
As part of our research methodology, we conducted four online surveys, one for each of our key stakeholders: business leaders, financial advisers, employees and retirees. Within the employee survey, we also explored the financial needs of non-permanent employees, including contractors, temporary workers and entrepreneurs, who are a key part of our South African economy.
Using the convenience sampling method, which ensures that varied viewpoints are taken into account, both Momentum Corporate clients and non-clients were sampled. The samples were representative of the various stakeholder groups. Where there were significant differences in our findings across the income brackets, we have highlighted these.
The surveys were created, sent and collated in June 2024 and analysed by the Data Analytics and Insights team from Momentum Corporate. In total, we had 893 responses across four groups.
Employees and contractors
• 100% of the employees were 18+ years
• 56% of employees were male
• 38% of the employees were Gen X; 39% Boomers; 17% Millennials; 6% Silent Generation
• 76 of the 426 employees were entrepreneurs, contractors, temporary or gig economy workers
Generation age brackets:
The Silent Generation
The Boomer Generation
Generation X Generation
Millennials Generation
Generation Z Generation
Gen Alpha Generation
– born 1925 - 1945
– born 1946 - 1964
– born 1965 - 1979
– born 1980 - 1994
– born 1995 - 2012
– born 2013 – 2025
The employees’ income was:
• 51% upper income
• 30% middle income
• 12% lower income
• 7% prefer not to say
Business leaders
• 96% of the leaders’ businesses have been operating for 11+ years
• 73% of the leaders’ functions involved human resources, finance, sales, business development and marketing
• 62% of the leaders are business owners, heads of departments, hold directorship or senior management roles
Retirees
• 69% of retirees surveyed were male
• 80% of the retirees were Boomers, 16% Silent Generation, 4% Gen X
The retirees’ income was:
• 36% upper income
• 33% middle income
• 22% lower income
• 9% prefer not to say
Financial advisers
• 96% of the financial advisers’ brokerages have been operating for 5+ years
• 58% of the financial advisers are consultants
• 39% of the financial advisers are brokerage partners and owners
The financial advisers’ specialist functions overlapped and varied:
• 85% in long-term insurance
• 82% in investments
• 65% in employee benefits
• 51% in healthcare
• 48% in short-term insurance
Note:
Some participants chose multiple options or preferred to not answer certain questions, so percentages do not always add up to 100%.
T rends and challenges04
In this section, we highlight the key trends that emerged from the survey responses and how these trends, and their challenges, play a role in shaping financial decisions and desires. Global economic policymakers cite signs that inflation is returning to normal but warn that many economies remain fragile around the world. Our research reveals that fragility in South Africa.
Over the past year, many people have faced a perfect storm of financial worries and uncertainty about the future. More than half (57%) of employees and one in three retirees were concerned that they would not have adequate retirement savings. Almost one in four employees experienced significant unplanned expenses and one in five said they were unable to meet their financial commitments. For some retirees (19%), fears were exacerbated by the fact that their children did not have the means to support them financially.
But it’s not just about money.
A key insight from our research is that people see retirement as a significant change in their lives and a change that makes them question their purpose. We found that the transition from employment to retirement has a clear impact on people’s sense of worth. On the positive side, many noted that this time can provide positive opportunities for retirees to re-define and re-imagine their purpose and broaden their contribution to society.
As well as purpose, for 39% of the retirees and 18% of employees, declining physical health is top of mind. Linked to this are financial concerns around not having enough medical cover and access to quality care.
Our results also show that employment itself has become less secure and there are deep uncertainties around job security in the future. Over the past year, almost one in five people have had to work fewer hours or for less money, and almost one in five are uncertain about the impact that new technology, such as AI, robotics and digital transformation, may have on their jobs.
From concerns about purpose and not having adequate medical cover to financial worries about supporting loved ones and unplanned expenses, these were the most common responses from both employees and retirees:
“I’ve been contributing to my retirement fund for years, but I still worry it won’t be enough.”
“If only I had started saving earlier, I wouldn’t be in this situation now.”
“I lose sleep over whether my pension will cover my basic needs after retirement.”
“Market volatility scares me. What if my investments plummet right before I retire?”
Trend 1: Not having enough retirement savings
Most respondents are concerned about the rising cost of living and the effects of inflation, and they reported being worried about the economy. These economic factors, overlain with their own personal insecurities, has led to people feeling increasingly anxious.
A big concern is not having enough money to retire with, with fears linked to:
• Outliving their savings especially given that people are living longer.
• Not having a well-thought-out retirement plan.
• Risks due to a lack of diversification in their retirement investment portfolio.
Many employees believe that they will not be able to maintain their lifestyle post-retirement and fear the unknown. Retirees regret not starting to save for retirement earlier and making unwise financial decisions.
Often these are a result of financial setbacks and life events such as divorce, job loss or medical emergencies, which forced them to dip into their retirement savings too early. For some, the stress of supporting dependants in retirement exacerbates this anxiety.
As a result, more and more people are considering how to secure additional income or boost their retirement savings.
Balancing the desire to save more for retirement with the reality of increasing living costs is a challenge. Lifestyle adjustments become critical as people re-evaluate their priorities, yet some still struggle with insufficient retirement income despite diligent saving. Retirees are also concerned about their family’s financial security once they pass on.
“My son lost his job and I have to support him.”
“My husband was very ill before he died, there were a lot of medical expenses not covered by medical aid.”
“Breaking of cars twice ... now I am left with this loan to pay off over 6 years.”
“Storm damage to roof, gutters and floor. So, you do it, and worry later about the gap it left in your savings.”
Trend 2: Significant unplanned expenses
We will all likely experience one of life’s (many) curveballs and unexpected events, such as illness, retrenchment, home and car repairs, without time to prepare. Unsurprisingly, almost one in four employees reported that such an event had occurred over the past year.
For those with emergency savings, it means depleting them and then starting to save again. For those without, it means tough decisions on what to prioritise and where to find the money.
The impact of additional financial strain from unforeseen expenses leaves people feeling a range of negative emotions about their future.
“Will it even be worth it, or enjoyable, or an absolute season of agony and anarchy?”
“We tend to let our work become our identity. If work is gone, who will I be?”
“As I approach retirement, I find myself reflecting more on my life’s journey.”
Trend 3: Not having purpose in retirement
Another key theme from this research is around purpose and fulfilment. We found that employees are increasingly thinking about their postretirement purpose. As they approach retirement age, they question how they will spend their golden years and whether the best part of their life is now behind them. The fear of not having purpose resonated with most people, showing a clear link between purpose and emotional wellbeing and happiness in retirement.
When asked to consider what they would do once they retire, our participants spoke about engaging more in purposeful activities. The retiree group shared a strong desire to contribute to their community and do good.
On this positive note, despite being a time of great change, retirement also holds new possibilities and excitement. Participants spoke about having “more time for lifelong learning,” taking “courses to reinvent” themselves, being able to “explore new interests,” “volunteering their time” and “mentoring others.”
“With kids and retirement in the next 20 years, I think about their expenses.”
Trend 4: The cost of supporting dependents
Family life can also change how people think about retirement. Parents and grandparents may be concerned about looking after their children or grandchildren when they are older. This can be stressful, especially if they must spend money that they were saving for themselves.
A major influence on household expenditure in South Africa is, in fact, the number of adult dependants. Called “the sandwich generation,” this is the group of middle-aged adults who care for both their ageing parents and their own children. This is becoming increasingly common with changes in lifespan and the trend towards having children later in life.
Our research shows that adult financial dependency remained relatively flat from 2023 to 2024. Almost a third of respondents have adult financial dependants, of which 55% have two, and 15% have three or more dependants. The average age of adult dependants is 61 years, showing that households are supporting their retired parents or family members. The average period of support is 12 years, and the average spend of household income on these dependants is 10%. This causes financial strain on already tight household budgets, which has long-term implications for household finances.
Trend 5: Present versus future concerns
Both our employee and retiree respondents said they have worries about money, health and their responsibilities – not just currently, but also as a future concern.
As a follow-up question, we asked what they are worried about or anticipate happening over the next two years. Similar trends were seen when comparing present experiences versus future ones:
1. Concerns around having inadequate retirement savings.
2. Thinking more about their purpose in their retirement years than ever before.
3. Their physical health declining.
4. Not being able to meet financial commitments.
5. Not having enough medical aid cover.
But now, time for the good news: South Africans are resilient.
More people are adopting pro-active behaviours to plan for retirement by considering, for example, paying off debt, investing in property or setting up businesses to secure a steady income.
Retirees who are already living this reality emphasised the importance of adaptability, flexibility and using what you have.
While the retirement journey is different for everyone, there are some similarities as this section has highlighted. By acknowledging both the shared and unique aspects of our clients’ views and experiences, we better understand and cater to their specific needs and preferences and, in the end, foster stronger and more personalised relationships.
U ncertainty: from risk to reward 05
Major changes this year in South Africa’s political and economic landscape, combined with the exponential growth of digital technologies, mean significant disruption in the lives of both businesses and the individual. If embraced, these disruptions can be a powerful force for growth and reward.
From the research, it was clear that the majority, if not all, of the participants felt some sense of financial uncertainty, whether in their personal lives, tied to the workplace or more broadly as part of society. For some, this uncertainty presented as a risk but, for others, there was a sense of reward with new opportunities and experiences. Those who had moved from a risk mindset to a reward mindset had accepted change and embraced disruption.
Disruption at the macro level
Momentum’s economists’ forecast that South Africa’s GDP growth for 2024 will remain low but resilient at 1,1%, with a slightly more optimistic view for 2025 of 1,8%. Inflation for 2024 is currently forecast at 4,7%, with projected inflation levels improving slightly to 4,3% next year.
Unfortunately, the unemployment rate, compared to last year, has increased from 32.6% to 33.5%.
On the political front, the formation of the Government of National Unity (GNU), although not a new concept to South Africa, has created a shift in the makeup of the political landscape. The ANC recently announced that the GNU has grown to include 11 of the 18 parties in parliament, holding more than 70% of parliamentary seats. While a larger GNU may complicate reaching consensus on key policies and face many challenges, it enhances democratic representation by including a broader range of constituencies. This should lead to more rewarding outcomes for the country.
South Africa’s landscape has been influenced further by two significant reforms this year. The first one is the signing into law of the National Health Insurance Bill in May 2024, which aims to achieve universal health coverage for all South Africans. The other, more recent reform is the introduction of the two-pot retirement system, which allows for a portion of retirement savings to be accessed for emergencies while preserving the rest until retirement.
Although the local economy remains resilient, these macro-economic and political factors combined with the muted economic growth projections mean that uncertainty remains a recurring theme for both businesses and individuals.
Disruption for business
As highlighted by the launch of the first cellphone in the 1970s, the rise of the internet in the 1980s and the introduction of OpenAI’s GPT-3 in the 2020s, the history of mankind is characterised by disruptive technologies.
These technologies have radically changed patterns or ways of doing things, bringing about major changes in business and people’s lives.
The past few years have seen heightened consumer expectations for digital service and payment options. These shifts have had a significant impact on traditional product and service offerings, as well as on the required skills needed (or no longer needed) within workforces.
Checkers SIXTY60
A recent example is the e-commerce market, which has seen major disruption over the past few years. An article published by RMB estimates that, within the next five years, the South African e-commerce market will be worth R225 billion. A case study for this is Checkers Sixty60, the number one grocery app in South Africa with 4,5 million downloads, as quoted in the Daily Investor (12 March 2024). The service is available in 505 locations and has created 9 903 jobs, while sales have increased more than tenfold since 2021.
Yoco technologies
Another example of disruption in action is the local success story of the Yoco payment system, a remarkable journey of innovation and determination. Katlego Maphai and his cofounders, inspired by the mobile point-of-sale technology they encountered in the USA, created
a comparable solution specifically designed for the South African small business market. By offering cost-effective, user-friendly and accessible financial tools, Yoco’s card machines and payment solutions have contributed significantly to the viability of small businesses, and therefore to financial inclusion and the transformation of the entrepreneurial sector in South Africa.
These are just two of many examples of business innovation and disruption, in an environment that is ever changing. Despite the risks, these businesses, and their consumers, embraced the opportunity and are now reaping the rewards.
Disruption for the individual
Ask yourself this: How do you respond to change? Does it motivate you? Or does it worry you?
Not only is life unpredictable but, in the dynamic environment in which we live, personal disruption is inevitable. This means that there is a strong likelihood of changes that the individual will need to adapt to, both in setting and in achieving their financial goals. Fortunately, embracing disruption is a powerful tool for personal and organisational growth.
When considering disruption in our own lives, technology is top of mind.
Tech has woven itself into our day-to-day lives, shaping the way we work, communicate and seek entertainment. Digital technologies, such as 5G networks and AI, have enhanced our efficiency and information processing capabilities, and changed the way we connect with others.
How we respond to change, and what we choose to do in our own lives, can help us achieve better financial outcomes.
In part 2, we look at the role that behavioural change can have to support this.
Note:
Please find references for the above chapter in the full insights paper on the Momentum Corporate website.