Retirement Crisis: Half Cashed Out Early

South Africa’s growing debt crisis is no longer confined to household budgets. It is increasingly following workers into the office, factory floor and boardroom, quietly eroding concentration, morale and long-term financial security. New industry research shows that half of retirement fund members have, at some stage, cashed in their entire retirement savings, while millions more are leaning on credit simply to cover everyday essentials such as food. The findings paint a troubling picture of a workforce under sustained financial strain, one that experts warn employers can no longer afford to ignore.

Key Takeaways

• Retirement savings are being raided early: Half of retirement fund members have cashed in their entire savings at some point, with only around 6% of South Africans currently on track to retire comfortably.
• Debt has become a workplace issue: Financial stress is following employees into the office, affecting their concentration, sleep, confidence and overall performance on the job.
• Credit is increasingly funding basic survival: Rising food and living costs, combined with growing unemployment, are pushing more South Africans to use credit for essentials such as food, deepening the cycle of debt.

Debt Follows Employees Into the Workplace

Debt does not remain neatly confined to a person’s bank account. For employees who are under financial pressure, the worry that comes with it can follow them into the workplace, affecting their concentration, their motivation, their sleep and, ultimately, their ability to perform their duties properly.

In fact, the Sanlam Benchmark 2024 shows that 50% of retirement fund participants have, at some point, cashed in the entirety of their retirement funds, with only around 6% of South Africans currently on track to retire comfortably.

More than 2.4 million South Africans have already withdrawn from their retirement savings since the two-pot system went live in September 2024, with as much as 80% of those withdrawals going towards debt repayments and essential living costs, according to the report.

Alex Cook, the CEO of the fintech company Wealthbit, explained that debt often develops gradually over time, rather than through a single major financial mistake. He noted that it often begins with small gaps in a person’s overall financial system, where there is no emergency buffer in place to absorb unexpected shocks.

No Control

At the same time, Cook pointed out that spending is very often not tracked closely, or is not tracked at all. Credit, he explained, tends to get used to cover short-term financial gaps, and making only the minimum payments creates a false sense of being in control. Over time, he said, those small cracks in a person’s finances become increasingly expensive to manage.

Cook said the pressure can become self-reinforcing, in that financial worry affects a person’s sleep and concentration, while lower productivity or poorer performance at work can, in turn, add to that same financial insecurity.

He added that debt does not only affect a person’s bank account, but also affects their ability to focus, to plan ahead and to cope while at work. When employees are dealing with ongoing money-related stress, he said, it can affect their confidence, their overall wellbeing and their performance on the job.

Financial Stress on the Rise

The extent of the pressure facing South African workers is reflected in the Old Mutual Savings & Investment Monitor 2026, which found that 40% of working South Africans were considerably financially stressed, an increase from 38% in 2025.

Among those earning below R30 000 a month, the proportion rose from 41% to 47% over the same period. The report identifies consumers’ ability to manage their debt as the leading driver of this financial stress.

Group	2025	2026
Working South Africans (overall)	38%	40%
Earning below R30 000 a month	41%	47%

Credit for Food

The study, which was based on an online survey of 1,519 working South Africans earning at least R8 000 a month, also found that 38% of respondents had approached a creditor in the previous year in order to arrange a payment plan, an increase of six percentage points from 2025.

FinScope’s South Africa 2025 Consumer Survey, which was based on interviews with 5,600 adults across all nine provinces, found that over-indebtedness and financial vulnerability were both on the increase. It highlighted that people are increasingly using credit to buy food, with rising prices for food and other everyday essentials, along with growing unemployment, fuelling this particular trend.

The South African Reserve Bank’s household debt-to-income ratio shows that South Africans are currently spending 62 cents out of every rand they earn simply on servicing debt.

• Old Mutual found that 24% of working South Africans had fallen behind on a personal loan repayment.
• This was found to be more prevalent among those earning between R8 000 and R30 000 a month.
• 38% of respondents had approached a creditor for a payment arrangement in the past year, up six percentage points on 2025.
• The household debt-to-income ratio stands at 62c for every R1 earned.

A Helping Hand From Employers

The problem is not only about getting through the current month. The Old Mutual research also points to a shorter-term financial mindset that can, over time, undermine a person’s long-term financial security, including their preparedness for retirement.

How Employers Can Play a Role

Cook said employers can play a meaningful role by helping their workers build systems that make managing their finances easier. He explained that a financial system which manages daily spending and prepares for the unexpected can make a considerable difference to an employee’s overall financial resilience.

According to Cook, the aim should not simply be to help employees deal with debt once it has already become overwhelming, but rather to identify the habits and the gaps that allow financial problems to build up in the first place.

He said that debt is far easier to prevent once a person understands the habits, the blind spots and the missing foundations that make it more likely to occur in the first place. Once those patterns can be spotted early, he explained, it becomes possible to respond more quickly, to reduce the damage caused, and to begin working out how to get out of debt in a practical and sustainable way.

Conclusion

These figures point to a workforce that is increasingly stretched thin, forced to trade long-term security for short-term survival, and a retirement system under real strain as more South Africans dip into their savings simply to stay afloat. Addressing this will require more than individual willpower alone. It calls for a coordinated effort between employers, financial institutions and policymakers to build the buffers, habits and support systems that can catch financial trouble early, before it spirals into overwhelming debt and jeopardises the retirement security of an entire generation of workers.