Young South Africans Face Growing Savings Challenges Despite Awareness
Old Mutual’s latest Savings & Investment Monitor – previewed ahead of its full July release for National Savings Month – paints a nuanced picture of Generation Z’s financial habits. While a large majority recognise the importance of saving, everyday pressures are pulling many away from long‑term goals.
Savings Goals vs. Reality
The survey of working respondents aged 18‑29 found that 91 % have set savings goals and understand why financial planning matters. Yet only 46 % reported saving regularly in 2026, a decline of 11 percentage points from the 57 % recorded in 2025 [1]. More than half – 56 % – had to draw on their savings to cover routine expenses, up 10 points year‑on‑year, and 22 % resorted to loans just to meet daily costs [1].
These trends coincide with a slowdown in income growth. The share of young earners who reported making more money than a year earlier fell from 55 % in 2025 to 51 % % in 2026 [1]. As wages struggle to keep pace with inflation, the gap between intention and action widens.
Financial Stress and the “Sandwich Generation”
Financial anxiety is rising. 36 % of respondents said they were experiencing financial stress, compared with 29 % the previous year [1]. A significant portion – 43 % – belong to the so‑called sandwich generation, providing financial support to both younger dependents and older relatives [1]. This dual responsibility further strains limited resources and makes building an emergency fund a top priority for many, even as stress levels climb.
Old Mutual’s head of financial education, John Manyike, noted that the data dispels the myth of Gen Z as financially impulsive. Instead, young South Africans are making pragmatic choices: prioritising immediate needs over distant goals when faced with rising living costs and debt pressures [1].
Impact of the Two‑Pot Pension System
Introduced in September 2024, South Africa’s two‑pot retirement system allows policyholders limited access to their pension savings in emergencies. By the end of February 2026, the South African Revenue Service had approved R79.3 billion in withdrawals from the savings pot, with 5.6 million individuals applying for tax directives [2].
Critics argue that easy access erodes long‑term retirement adequacy. Frikkie van Loggerenberg, CEO of Ifsa Asset Managers, warned that habitual use of the savings pot can deplete retirement funds over time, noting that “if you have access to it every year you will use it up” [3]. He referenced the 10X Investments Retirement Reality Report, which found that only about 6 % of South Africans are on track to retire comfortably [4]. Van Loggerenberg contends that preserving retirement money until actual retirement would alleviate the pressure on younger generations who often rely on their children for support in later life.
Supporters of the two‑pot model, including government officials, maintain that it prevents people in dire financial straits from abandoning employment to access full retirement benefits, thereby preserving the core retirement pot for its intended purpose.
Outlook and Recommendations
The South African Reserve Bank reported a modest rise in the national savings rate to 14.9 % of GDP in Q1 2026, up from 13.3 % in Q4 2025 [5]. Analysts caution that this gain may reverse in the second quarter as living costs continue to outpace income growth.
To bridge the gap between awareness and action, experts suggest:
- Enhanced financial‑literacy programmes that focus on practical budgeting tools tailored to irregular income streams.
- Employer‑supported savings schemes, such as payroll‑deducted emergency funds, to reduce reliance on high‑cost loans.
- Policy reviews of the two‑pot system to balance emergency access with stronger incentives for long‑term preservation.
- Targeted incentives for retirement contributions, especially for low‑ and middle‑income earners, to improve the current 6 % readiness level.
As National Savings Month approaches, the data underscores a clear message: young South Africans are eager to save, but structural economic pressures and immediate familial obligations demand innovative solutions that make saving both accessible and sustainable.
[1] Old Mutual, “Savings & Investment Monitor – Preview”, July 2026.
[2] South African Revenue Service, “Retirement Savings Withdrawals Statistics”, February 2026.
[3] Frikkie van Loggerenberg, interview with Business Day, March 2026.
[4] 10X Investments, “Retirement Reality Report 2023/24”, 2024.
[5] South African Reserve Bank, “Quarterly Bulletin”, Q1 2026.
