Two-thirds of world’s workers not saving enough for retirement

…As Nigeria, with 75.5m, accounts for Africa’s highest labour force

Ben Eguzozie

Almost two-thirds of working age individuals in the world, who began seeking financial advice last year from one of the world’s largest independent financial advisory and asset management organisations, were not adequately saving for their retirement when they started, it has been revealed.

In a global survey of over 800 clients, 65 percent of new clients the deVere Group took on as a firm in 2023 were not saving enough in order to be able to have a “comparable lifestyle in retirement.”

In 2023, data from Statista said, there were estimated to be 3.4 billion people employed worldwide. This was compared with 2.28 billion people employed in 1991, showing an increase of around 1.1 billion people.

It follows from the above data that some 2.7 billion workers in the world hardly save enough for their retirement.

A comparable lifestyle in retirement refers to maintaining a standard of living in retirement that is similar or equivalent to the one experienced during an individual’s working years. This includes having enough financial resources to cover essential expenses such as housing, healthcare, food, transportation, and other basic needs, as well as discretionary spending on activities and interests that contribute to overall well-being and enjoyment.

Nigel Green, the CEO of deVere Group, says: “This is an alarmingly high percentage. The results highlight a critical gap in retirement savings awareness and underscore the pressing need for individuals to prioritize and optimize their retirement planning”.

Green added: “When we initially meet with new clients, we do detailed studies of their current financial situation. Then we discuss what age they would like to retire and how much money they would need to have saved over their working lives in order to achieve this. Last year, only about a third when we first met them were saving enough to be able to make their own long-term financial objectives a reality and having enough money to last throughout their retirement.”

According to him: “The high number of individuals not having accumulated enough for their retirement is concerning for many reasons including because we’re living longer, meaning the money we save throughout our working lives has to last longer. In addition, it should be noted that it might not be possible to work longer if necessary due to ill health, lack of career opportunities, or because you need to look after sick or elderly relatives.  Ultimately, that decision might not be yours.”

The global picture is diametrically opposed to the case in Africa, a continent with a recent population of 1.4 billion people, where workers grapple with pension difficulties, poverty and tumbled wellbeing at retirement. The continent, with a recent population of 1.4 billion people, has over 484 million people employed as of 2022, according to statistics from Statista.

According to an OECD working paper on “Pensions in Africa” in 2009, most Sub-Saharan African countries do not have meaningful publicly managed pension and social security systems, though some form of pension coverage is available in a limited number of countries. Where benefits are offered to formal sector workers, they are provided either by public service pension schemes, which by far, is the largest employer in most countries in Africa.

Nigeria’s 75.5 million workers highest in Africa

Data further indicate that Nigeria has Africa’s highest number of people employed, with 75.5 million as of December 2023. The West African country is followed by Ethiopia in East Africa, with 56 million workers.

In particular, a survey by Cowrywise in August 2023, says only 32.5 percent of Nigeria’s workforce (equivalent to 24.54 million) are actively saving for their retirement. “This is a clear indication that a significant portion of the population is not taking their retirement planning seriously, which could have serious consequences down the line,” the survey said.

Retirement planning is a complex and dynamic process that requires careful consideration and professional guidance. deVere Group is committed to empowering clients with the knowledge and solutions needed to secure their financial futures.

“The survey results serve as a wake-up call for individuals to reassess their retirement savings goals and take proactive steps towards achieving a comfortable retirement,” Nigel Green added.

Bearing this in mind, how much income should we be putting aside for our retirement?

That will depend on your age and when you started saving, amongst other factors.

However, in general terms, deVere Group, which has helped tens of thousands of savers get on track with their retirement planning, suggests that people aged between 25 and 34 should be saving between 15 and 20% of their income; for those between 35 and 44 this should increase to 20 to 30%; for the 45 to 54 bracket it goes to 30-40%; and those 55 and over would need to save a considerable amount more.

“Of course, this all depends on the individual and their personal and professional circumstances, as well as their objectives and desires for retirement,” Green concludes, adding: “Whatever stage you are at in your working life, the time to start saving is now. The earlier you begin, the easier it will be to reach your long-term goals.”

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a global network of offices, over 80,000 clients and $12bn under advisement.