While most of us understand the importance of saving for retirement, many people think of it as something so far into the future that they don’t have to worry about it today – not when the struggle to keep up with day-to-day expenses is all-consuming.

You’ve probably seen the stats: only 6% of South Africans will be able to retire comfortably, which means that 94% of us are unprepared for the day we stop work.

But these are percentages and statistics without a face. Old Mutual Corporate wanted to see what the implications would be for real families in real life, so they conducted a social experiment.

Going over budget
Eight South African families were placed in an anonymous grocery store where the items were not priced. They were asked to fill their trolleys with the groceries they would normally buy for a month.

What the shoppers didn’t know was that the prices of store items were inflated to reflect what they would cost the day the family breadwinner retires. When the families reached the cashier to pay, all of them were over budget – some by as much as 800%.

Young family: The Khumalos. Members: Zam, Didi and AJ

‘We can honestly say that the experiment changed the way we shop and how we view saving for our retirement,’ says Didi.

‘We happily participated but didn’t realise the prices of goods were inflated according to projected inflation rates and that we’d be paying what the items would cost when we retired in 2060. We were shocked that we had overspent and wouldn’t be able to afford what was in our trolley. It was an eye-opening experience.’

Zam agrees that it was a reality check.

Soon after, they made an appointment with their financial adviser to look at how much they are currently saving and which investments will take them where they want to go.

Take care of your financial health
‘We realised there are grocery items we really need and ones we can live without. This helped us decide which items to take out of our trolley.

‘Lifestyle adjustments are also important, so I put back some red meat to change to a more plant-based diet in the future,’ says Zam.

Didi’s advice for young people is not to believe that they have lots of time. ‘If you’re waiting for the perfect financial circumstances to start, you will always have an excuse,' she says. ‘Start with what you have.’

‘You should give regular attention to your financial health. For example, if you visit your dentist twice a year, you should also see your financial adviser twice a year to make sure you are still on track to achieve your dreams and goals.’

Multigenerational family: The Johns. Members: Zena, Narainamma and Shaskia

What do you do when you realise your retirement savings will be wholly inadequate for your retirement? This sobering realisation came when Zena had to put back 90% of the items she had in her shopping trolley.

‘I realised that I was ill-prepared for retirement, which is stressful for the entire family. The Covid-19 pandemic affected me directly because much of my work is in the tourism and leisure industry.

There’s a lesson here about how to better withstand economic shocks and put firm plans in place for the future,’ says Zena.

Money and mental wellbeing
Many of the participants didn’t realise that the social experiment would have such an emotional impact on them. ‘I received emotional as well as financial support from Old Mutual. There is no denying the strong link between your money and your mental well-being.

‘Our family received sound guidance and we are in savings mode, trying to make smart investments and shop and live more mindfully,’ says Zena.

Extended family: The Tifflins. Members: Candice, Jonathan and Timothy

Discussing her finances was an eye-opener for Candice.

‘When it came to financial planning for my retirement, I didn’t fully grasp my position until I participated in the social experiment. While the day I have to retire seems so far away, it’s closer than I thought, so it required some hard conversations, financial adjustments and honesty,’ she says.

One of the main areas the Tifflin family focused on was shopping – how they shop and what they are spending their money on.

‘I cut out unnecessary purchases and luxury grocery items, and now make sure that other family members also do some of the shopping. Previously, I did it all and ended up paying for everything for the entire household.

‘The most important guidance I received from the Old Mutual financial adviser is to always know my financial standing so that I can deal with debt and monitor my daily spending to retire one day with peace of mind.’

3 things you can do right now to save

1. Deal with debt
You’ve probably heard it before, but debt is a vicious cycle, especially if a third or more of your income goes to repaying credit cards, store accounts and other debt each month.

If you feel as if you are drowning in debt, speak to a financial adviser before taking on loans to repay the debt you already have.

2. Grow your income sources
Perhaps you can rent out a room or even your garage to someone who needs storage? Or is it possible to carpool with colleagues to save on petrol? These things might sound inconvenient, but the alternative – having to deal with debt collectors – will be far more inconvenient.

3. Start shopping online
Online shopping is here to stay and it’s worth taking advantage of. Yes, the specials are mostly the same as in the stores, but you will save as you won’t be as tempted to buy anything extra.

Even when there is a delivery fee, it tends to be less than the price of a snack, a drink, the petrol to drive to the mall and the parking fee, not to mention the cute little dress you saw from the escalator.

Lesson #1: don’t despair

Malusi Ndlovu, Director: Large Enterprise Market, Old Mutual Corporate

‘Insufficient retirement savings have become a hot topic as people’s life expectancy increases – especially for women, who need more money but get paid less than men.

The social experiment showed how prepared our participating families are for retirement and the possible implications for those who were unprepared. It turned out to also reflect the retirement situation in South Africa.

Across the board, one of the major takeaways for the families was that it’s never too late to start – but that it’s essential to get sound financial advice first, so you know what to do next.

A financial adviser can help by breaking down information and making it easy to understand. They can also help you to set appropriate goals and draw up an action plan for achieving them.’

Worried about your retirement savings?
To speak to an Old Mutual financial adviser, call Old Mutual on 0860 60 60 60 or visit our website.