Young South Africans Cut Savings Rate to 46%, Widening Gap Between Financial Plans and Rea

Old Mutual’s Savings & Investment Monitor, released ahead of national savings month in July, puts a hard number on a worsening trend: only 46% of working South Africans aged 18-29 save regularly, down 11 percentage points from 2025. The gap between financial intention and financial action among Generation Z is widening fast, and the economic forces driving it show little sign of easing.

The data signals trouble for long-term wealth accumulation. While 91% of working young South Africans acknowledge savings goals and recognize the value of financial planning, actual savings behavior is deteriorating. More than half of Gen Z savers (56%) have withdrawn funds from savings accounts to cover daily living expenses, a 10 percentage point jump from the prior year. Nearly one in four young workers (22%) have taken loans to fund routine expenses. Financial stress affects 36% of respondents, up from 29% in 2025.

Income growth, a critical variable for savings capacity, is stalling. The share of young people earning more than they did a year earlier slipped to 51% in 2026 from 55% in 2025. That income stagnation, combined with rising living costs, is eroding the financial buffer needed to fund emergency reserves, which Gen Z identifies as a top-five financial priority.

The survey also identifies 43% of Gen Z respondents as members of the “sandwich generation,” simultaneously supporting both younger and older family members. That dual dependency compresses the margin for any discretionary saving.

John Manyike, Old Mutual group head of financial education, pushed back against the stereotype of an impulsive generation. “Young South Africans understand why saving and planning matter. However, ongoing economic pressure is leading many to prioritise today’s needs over tomorrow’s goals,” he said.

Meanwhile, the macro picture offers mixed signals. The South African Reserve Bank’s latest quarterly bulletin reported the national saving rate rose to 14.9% of GDP in the first quarter of 2026, up from 13.3% in the fourth quarter of 2025. Analysts expect that rate to retreat in the second quarter as rising living costs intensify household financial strain across income segments.

Structural deficiencies compound the problem. Frikkie van Loggerenberg, CEO of Ifsa Asset Managers, identified a persistent gap between emergency savings and retirement planning. “For South Africans in general, there is a bit of a lack of a savings culture. Everybody tries, but there’s not that 100% commitment to get to that point, and there’s not enough focus or commitment to retirement planning,” he told Business Day. “On the other hand, there is this economic pressure where things are getting more and more expensive each day, and people are battling. The income is battling to keep abreast with inflation.”

The two-pot retirement system, introduced in September 2024 to permit limited access to retirement savings for emergencies, sits at the center of that debate. Proponents argue the mechanism prevents workers in financial distress from resigning solely to access full retirement balances, while keeping the core retirement pot intact until retirement age. By end-February, the South African Revenue Service had approved R79.3 billion for withdrawal from savings pots, with 5.6 million people applying for tax directives on withdrawals.

Van Loggerenberg is unconvinced the system serves long-term wealth building. “On the research that we’ve done, if you have access to that savings pot, each and every year you will use that up. It’s a fact of life, and you get into that routine to do it. So that makes a huge impact on your long-term retirement savings that the money is there for,” he said. “I don’t think it was a good decision. I think that retirement money should stay retirement money and you should not have access to that till the day that you actually retire.”

The stakes are not abstract. Van Loggerenberg cited 10X Investments’ 2023-24 retirement reality report, which found only 6% of South Africans are on track to retire comfortably, with the remainder either continuing to work or relying on family support. That structural inadequacy feeds intergenerational financial dependency, precisely the cycle that adequate retirement savings are meant to break. Whether the two-pot system accelerates or slows that cycle will depend on whether annual withdrawals become routine, and the early withdrawal volumes suggest the answer is already taking shape.