How to Build Financial Resilience Through Insurance and Retirement Savings
South Africans are notoriously poor savers. In fact, for the vast majority of the population, insurance and retirement savings are almost non-existent. It comes as no surprise, then, that South Africa has one of the
lowest savings rates in the world. And that’s not only because of dire poverty or the vast income gap so evident throughout society. The lack of financial resilience is even a factor among those of us who may already have the means to build up a financial safety net.
Why is this? Well, partly because many people perceive the financial services industry as being unnecessarily complicated and impersonal. There’s also the all-too-common human tendency to put things off. You promise yourself you’ll start saving or investing money when the next raise comes through, or that year-end bonus.
But when it comes to financial resilience, the very best thing you can do to improve your financial stability… is to simply make a start toward your longer-term financial goals, no matter how modest or ambitious.
What is Financial Resilience – and How is it Measured?
Financial resilience is broadly defined as an individual’s ability to compensate for unforeseen financial losses or shocks. Those unexpected events could range from sudden loss of employment to uninsured damage to property. They could also encompass events like catastrophic illness, or massive indebtedness.
A typical global yardstick used to measure financial resilience is that of the $2,000 safety net. If you had to quickly come up with an additional $2,000 (just under R40,000 at current rates), would you be able to?
Surveys show that very few families are in a position to deal with any kind of personal financial crisis. In fact, 64% of households surveyed around the world stated that their income had markedly decreased in the aftermath of the Covid-19 crisis and the economic devastation wrought by the pandemic. Another recent study found that around 61% of South Africans are financially stressed and are struggling to meet even their most basic financial obligations. In fact, almost 40% of those surveyed believe that their financial situation has significantly worsened since 2022.
If ever financial resilience was needed, it’s now.
How Gender and Demographic Affect Financial Resilience
Two key facts emerge from the surveys that have been conducted:
- Men are disproportionately more financially resilient than women, and
- Insurance is (still) the greatest predicator of and contributor toward general financial resilience.
Let’s examine that for a moment. Firstly, in the South African context, women have traditionally had far less financial agency than men and are more financially vulnerable as a consequence. And although those differences are theoretically being addressed, the reality is stark.
Here’s a simple breakdown for comparison:
- Men aged 45 – 59 enjoy far more financial resilience than any other demographic group.
- Both Black and White men are financially more resilient than their female counterparts, although White women generally have a higher level of financial resilience than Black women.
- This points toward the fact that demographic and socioeconomic divides are accurate indicators of financial resilience (or lack thereof).
- Men overall have the highest level of participation in the labour market.
- Men generally have greater access to financial services.
- Access to employment, and educational opportunities, contribute enormously toward the empowerment of lower-income women in South Africa.
What does that mean for you in terms of your own approach to insurance and retirement savings? Simply this: there’s no such thing as too big a margin of safety when it comes to finances. And if you’re currently financially vulnerable, it makes sense to prioritise creating a financial safety net.
Smart Financial Thinking
For many people, finances can be a
highly emotional topic. We’re deeply affected by the prospect of financial losses and can make unwise decisions based on impulse or opinion that don’t always serve us well in the long term.
For that reason, it makes sense to engage with experts – professionals who not only take an objective view of things, but who understand exactly how to leverage your money to produce the best possible returns.
Engaging the services of a brokerage like The Pogir Group also means that you gain practical support, real expertise, and reassurance. Creating financial stability and building wealth becomes a collaborative project, with well-defined goals and commitments on both sides. You can rest assured, knowing that you’re being guided in best practices by vastly experienced advisors – so you don’t have to reinvent the wheel or run the risk of making costly mistakes.
Whether you’re an experienced businessperson seeking to consolidate your assets and create greater wealth for your family, or a first-time investor who simply wants a greater measure of financial security through better insurance and retirement savings options, we can assist you.
The Do’s and Don’ts of Financial Resilience
Here are some of the steps you should take – right now – to increase your financial resilience.
- Ensure that you have adequate life insurance. Coupled with disability insurance, this is the absolute best way of protecting your loved ones from financial hardship in the event of a crisis that leaves them without you to provide.
- Alongside life insurance, make sure you have medical insurance. Ideally, a comprehensive medical aid plan is needed, but even hospital insurance can be a starting point. The Pogir Group offers tailor-made healthcare solutions to suit your needs and lifestyle, and an experienced consultant can help you identify the option that fits you best.
- Begin saving, if you haven’t already done so. Yes, your parents said you should, and they were right. We can help you with a comprehensive life financial planning service that helps you prioritise building up that buffer for greater financial resilience.
Here are some things you should be avoiding:
- Procrastination! We’re all prone to putting things off – but when it comes to your financial security, timing and consistency are really important. Make that decision, take action, and let us help you as you grow and progress in your financial journey.
- Dipping into your savings or retirement income. The temptation may arise, but every withdrawal from a savings or retirement plan is that much harder to make up in future terms.
- Avoid accessing loans to pay for consumer goods or services – the hidden costs are a drain on your financial foundation. Once again, putting money aside and building up your financial independence makes far more sense.
Start Local, Think Global
South Africa is a developing economy. But when we compare it to similar developing economies – like those of Brazil and India, for example – it doesn’t fare very well. The South African Rand is notoriously weak and as the cost of living increases, spending power dwindles.
Very simply, this means that there’s another kind of financial resilience to consider in addition to insurance and retirement savings. To future-proof yourself against inflation, supply chain challenges, and the long-term effects of South Africa’s power crisis, you can’t afford not to build a financial safety net.
If you’re already in a position where your future financial requirements are realistically catered for, then you should be looking at ways to arbitrage your currency and spread financial risk more evenly. The best way to do that is to consult with us in order to access a wide spectrum of
local and offshore investment opportunities.
Build Better Financial Resilience with The Pogir Group
At The Pogir Group, we provide a wide range of financial services suited to your unique needs. Our consultants are experienced specialists who provide expert advice and guidance – with services that include short-term insurance, life financial planning, personal and corporate healthcare solutions, facilitating employee benefit programs, or expertly managing the wealth of our valued clients.
At Pogir, we place a premium on trust, integrity, open communication, and a long-term relationship with each of our clients.
Ready to look at proven ways of increasing your financial resilience?
Contact us today to arrange a no-obligation consultation.
Pogir.
Smart, with heart.