The great savings debate: Retirement vs education
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