• Sharebar
Financial Planning
Monday, August 24, 2015 - 02:16
Sandwiched by responsibilities

The number of people who are supporting their children as well as their parents is growing. This is one of the research findings of this year’s Old Mutual Savings & Investment Monitor. In fact, 25% of all working metropolitan South Africans now fall into this Sandwich Generation category, the highest percentage since the Monitor’s launch in 2009. [That is, a generation of people, typically in their thirties or forties, responsible both for bringing up their own children and for the care of their ageing parents].

The financial consequences of having two generations of dependants is starkly revealed by the statistics: this year 28% of Sandwich Generation individuals are overdue with debt repayments, compared with 15% for the ‘Non-Sandwiched’. But the Sandwich Generation is not the only group under financial pressure: 41% of all respondents state they are saving less than they were a year ago. In the lower household income category (those earning R6 000 and less per month) this number rises to 51%.
What’s more, many have no financial buffer or emergency fund. For example, as many as 52% say they would have to take out a personal loan, rely on credit facilities or borrow from family and friends to be able to manage an unexpected expense of R10 000. Another 28% say they would not be able to handle a bill like that at all.
There is however a plus side, says Old Mutual research manager Lynette Nicholson. “There are signs of a growing awareness of the benefits of saving and investing. It is encouraging to note that approximately 60% now contribute towards a pension/provident fund and/or Retirement Annuity, compared with around 50% in 2012. The incidence of saving through unit trusts, particularly among higher earners, has also risen steadily: from 10% in 2009 to 22% in 2015.”
The growth in the number of working metropolitan households saving in stokvels is even more remarkable, she adds. “It has increased from 45% in 2014 to 58% in 2015 – and is most pronounced in the R14 000 – R19 999 and R40 000+ household income categories.
“But stokvel savings are generally not designed for growth, and what these findings of the Savings and Investment Monitor highlight once again is the urgent need for greater financial knowledge and understanding in South Africa. This can best be achieved through expert advice and education on financial planning, debt reduction and wealth creation.”

Copyright © Insurance Times and Investments® Vol:28.8 1st August, 2015
1562 views, page last viewed on January 15, 2021