By Ross Marriner
According to research conducted by Allan Gray, millennials – those individuals born between the
early 1980s and early 2000s – tend to focus on saving for short-term goals but often overlook the
importance of long-term financial planning, particularly for their retirement. They tend to be more
debt-averse when it comes to credit cards and large purchases like homes or cars. This caution is
evident in lower rates of homeownership and delayed milestones like marriage and starting families,
often tied to financial readiness rather than cultural expectations.
When investigating the reasons for this trend, researchers identified a number of common
excuses made by the respondents. These included a lack of money, high expenses and being part of
the sandwich generation (having to support both their own children and aging parents). Many cited
limited access to employer-sponsored retirement plans, particularly for those in freelance or gig-
economy jobs. There is also a prevailing belief among some that retirement planning can wait until
later in life, a mindset that can lead to significant financial setbacks.
Growing up with the internet and rapid technological advancements, millennials were among the
first to adopt digital banking and financial management tools. Budgeting apps, mobile wallets and
online investing platforms are part of their everyday financial toolkit. However, their digital
upbringing also influences their psychology. The age of instant gratification — fueled by social
media, streaming and on-demand services — has made waiting for long-term rewards less appealing.
This preference for immediate results can undermine the urgency of planning for events decades in
the future.
Moreover, millennial financial priorities often lean more toward life experiences than traditional
asset accumulation. Travel, hobbies, and personal development frequently rank above saving for a
house or retirement. While this shift in values is not inherently negative, it can delay crucial steps
toward long-term financial security. The earlier one begins saving for retirement — even with modest
amounts — the more significant the benefits are due to compound interest. If you were to invest
R1 000 a month for a 10-year period from 25 until age 35, then stop investing, you will have an
investment worth approximately R2-million at age 65, assuming an 8% annual return. In
comparison, if you only started investing R1 000 per month from age 35 and continued investing for
30 years to age 65, your investment would only have grown to around R1,5-million.
Despite this, only 6% of South Africans are currently on track to retire comfortably. The remaining
94% may need to continue working beyond retirement age or rely on support from family or the
state.
To build a sustainable financial future, consider following the 50-30-20 rule: allocate 50% of your
after-tax income to essential expenses, 30% to discretionary spending, and 20% to savings and
investments.
A Certified Financial Planner® will be able to assist you to prepare a practical plan to grow your
wealth over the long term to ensure that you and your family enjoy a comfortable retirement.
Rands and Sense is a monthly column, written by Ross Marriner, Certified Financial Planner® with PSG Wealth.
