Saving for a Funeral
More many South Africans saving for a Funeral has become more important than saving for retirement.
Saving for anything is difficult because everything costs so much. Consequently South Africa has one of the worst savings rates in the world.
Not only that: the attitude to retirement savings explains why only 6% of South Africans are financially independent on retirement.
The rest depend on their families or the government. Prices rise steadily so that sometimes it’s difficult to get through the month before running out of money.
So if South Africans do Manage to save Anything, where do their Priorities lie?
Most people in South Africa choose to spend the little bit of money they save on a decent funeral than saving for a rainy day.
A good funeral plan will take care of your family long after you’re gone.
Even though billions of Rands are invested in Stokvels, studies show that the money doesn’t always find its way into the funeral financial system.
The little bit of Money earned goes on Funerals
Funeral poverty is rife in South Africa, which is an indicator of the insecure job market. Crematorium staff are seeing a rise in demand for cremations for those people who are unable to meet the cost of arranging a coffin or burial. There has also been a rise in DIY funerals where people can buy a coffin online and even transport the body themselves.
Death occurs at any time and people want to know there is money to bury a loved one – they want to know that they won’t have to borrow money from a family member to arrange a burial.
Saving for a Decent Funeral is Top Priority
The Old Mutual Savings & Investment Monitor claims that almost 40% of working South Africans don’t contribute to a pension, provident fund or a retirement annuity. They aren’t making any provision for their retirement. And this doesn’t only apply to poor people, according to surveys, a good amount of people with a monthly income of more than R40 000 don’t contribute to a retirement fund.
A typical example of this is Naniki Malakwane who works as a tea maker for a private company
She receives no special benefits but makes contributions towards UIF. With her small salary, she is prepared to put R160 a month on a funeral policy that doesn’t only cover her, but her entire family – a husband, 3 children, sister, nephew as well as 2 grandchildren.
She will tell you that if one of her family dies, she will get a coffin, two buses, a tent, table and chairs, pots and a stove. She says that she can’t see the point of saving for retirement simply because she doesn’t have enough money to put away for this.
She is the only breadwinner and needs the money she earns to pay for emergencies because both her sister and her husband don’t have jobs.
There are Truly Affordable Options
A meaningful memorial needn’t bankrupt your family. A direct cremation for instance is where the body is cremated shortly after death. It eliminates embalming and often an inexpensive but appropriate container is used.
People are also looking at home funerals – organising the entire funeral process themselves, cutting out all the costs of hiring a funeral home. Prices can vary dramatically among funeral products and services, so do research – look online, check prices.
Spending time comparing prices could save you thousands of Rands and make it possible for you to start saving for your retirement too.
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All info was correct at time of publishing