The great sav­ings de­bate: Re­tire­ment vs ed­u­ca­tion

Finweek English Edition - - MONEY - BY JUSTINE OLIVIER

The re­tire­ment land­scape in South Africa is not a pos­i­tive one. Liv­ing i n a countr y known for its poor sav­ing habits, South Africans of­ten leave re­tire­ment on the back­burner in favour of im­me­di­ate gratif ica­tion. Trea­sury re­ports that only 6% of South Africans will be able to main­tain their cur­rent lifestyle come re­tire­ment age. Putting away enough for an emer­gency fund is a huge chal­lenge for many, let alone sav­ing enough money for re­tire­ment. This is fur­ther com­pounded by the need to put enough money away for the ed­u­ca­tion of one’s chil­dren – and the ris­ing cost thereof.

“Given the cost of liv­ing, sav­ing for re­tire­ment and sav­ing for ed­u­ca­tion, there are few who can com­fort­ably af­ford all three. Stud­ies are im­por­tant, but spend the min­i­mum amount pos­si­ble to achieve stud­ies [if bat­tling to af­ford sav­ing for re­tire­ment si­mul­ta­ne­ously],” says Ron­ald King, head of tech­ni­cal sup­port at PSG Wealth. One of the worst things you can do as a par­ent is to de­pend on your child dur­ing re­tire­ment, he says.

“Your own fi­nan­cial fu­ture re­mains para­mount,” says King. “Pay­ing for ev­ery­thing does not teach your child the nec­es­sary f inan­cial hard­ship lessons – that is an im­por­tant part of ed­u­ca­tion.”

Over­whelmed with the cost of liv­ing, in­clud­ing the ris­ing cost of ed­u­ca­tion, the ma­jor­ity of South Africans are opt­ing to save for re­tire­ment over sav­ing for the ed­u­ca­tional needs of their chil­dren, a trend that has emerged glob­ally.

How­ever, as a par­ent, you can­not un­der­es­ti­mate t he i mpor­tance of pro­vid­ing your child with a good ed­u­ca­tion. So, how can one f ind the right bal­ance and be able to save for

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