SA middle class haunted by debt

Haunted by high levels of debt, a significant portion of the South African middle class, is worried that it will pushed into poverty at retirement.

This is suggested in the latest survey of money matters within the South African middle class commissioned by Visa.

Visa said the study surveyed 2000 people across the country who have household financial decision-making responsibilities. “The report was designed to uncover attitudes and behaviour toward money matters and identify areas where South Africans are putting themselves at risk”.

The report said when asked about the biggest threat to their wealth, 29% of respondents cited debt levels, the biggest proportion by far. Eighty nine percent of respondent said they had debt with an average repayment of R7283 per month. Next on the pyramid of worries was inflation (19%), the global economy (16%), political uncertainty (14%), employment uncertainty (14%), poor investment returns 5%, their kids (2%).

The report tallies with a number of exhortations which have different directions suggesting that South Africans were piling up debt which might lead into a financial bubble akin to the one which sunk the US in 2007.

Asked whether they will ever be financially free, 52% said they would never be, while 46% said they thought they would achieve it. Two percent said they already are.

Of those who think they will one day be financially free, 68% said they would only achieve this after the age of 50.

The report noted that interestingly, 60 is the average planned retirement age but 15% say they will never retire. Thirteen percent say they will retire at 50 while 41% say they will retire at 65 or older.

Eighty seven percent said they would retire in South Africa while 13% favoured retiring abroad, with Europe and the UK the top choices.

Key findings:

  • 52% say they’ll never be financially free
  • R7283 is the average amount spent paying off debt each month
  • 65% think the global economy will stay the same or get worse in next 5 years
  • 20% think the Rand will dramatically depreciate over the next 5 years
  • 27% feel that the political leadership in South Africa rather than the crime (17%) is a pressing issue that requires attention and resolution.
  • 52% currently own property, 64% say that they will have paid off their house by the time they retire.
  • 29% say that their level of debt is the single biggest threat to their wealth
  • 20% have no investments at all, 19% saving zero for retirement
  • 53% say property is the asset most likely to make them wealthy
  • 15% do not plan on ever retiring; but 85% of those who are planning to retire are currently saving for their retirement
  • 32% are most likely to look to a financial advisor first when investing in a new asset. 21% would look to their spouse or partner for advice first
  • 71% are planning on leaving an inheritance for their family. Only 2% plan on not leaving any inheritance at all
  • On average, those who give to charities give R5 843 every year
  • 13% of these individuals plan on retiring outside of South Africa
  • 94% say good education more important than leaving their children an inheritance
  • The majority (58%) would pay off all their debt if they won R5 million


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