RETIREMENT PLANNING PRACTICES OF INDIVIDUALS OPERATING IN THE SOUTH AFRICAN INFORMAL ECONOMY

Abstract

Of the total number of economically active individuals in South Africa, approximately 43% are engaged in the informal economy. Despite its substantial contribution to the national labour market, this sector is often marked by limited enforcement of employment legislation. Workers within the informal economy are predominantly self-employed, and this segment exhibits minimal engagement in structured retirement planning. Such a trend raises critical concerns regarding their financial stability in the post-retirement phase. To investigate the retirement planning behaviours of individuals operating within South Africa’s informal sector, a mixed-methods research design has been employed. The study’s findings indicate that retirement planning is influenced by a broader array of variables beyond basic demographic characteristics. Notably, there is a low uptake of formal retirement products and limited reliance on professional financial advisory services among informal workers. These insights underscore the pressing need for targeted strategies, including financial literacy initiatives and the enhancement of access to formal financial mechanisms, tailored specifically to this group.