Just recently, I was having a conversation with someone in the financial industry who was bemoaning that the number of South Africans who can afford to retire remains stubbornly at 6%, despite all of the efforts being put into financial education.

Well, the good news is that these figures look set to change.

According to the latest Alexforbes Member Insights 2026 report – which analyses data from over 1.1 million active retirement fund members – the proportion of members projected to retire comfortably with at least 75% of their final salary has jumped from 6% in 2021 to 10% in 2025.

While that percentage might still sound low in absolute terms, in relative terms it is a two-thirds increase in people actually on track to afford retirement.

Across the board, average projected retirement income rose from 40% of final salary to 46%.

So, what drove this sudden improvement? In short: strong market returns.

The power of market growth

Investment growth accounted for most of the improvement over the last four years.

For 92% of fund members, investment choices are made automatically through their fund’s default portfolio, and these default options have recently delivered robust growth.

For example, a typical high-growth default fund saw five-year annualised returns of around 15%, well ahead of inflation.

When markets perform well, compounding works its magic in the background without you having to lift a finger. It highlights just how critical it is for fund trustees to manage default options effectively, as most members rely entirely on these growth engines.

Why preservation matters

While market returns gave our savings a welcome boost, great investment returns cannot fix bad habits or early withdrawals.

The reality is that 9 out of 10 South Africans are still not on track to retire comfortably.

This is because market returns are only one part of the equation. You have to have money in order for it to grow. So preserving your money – keeping it untouched until you actually retire – is what allows those market returns to build real wealth over time.

The true cost of early withdrawals

To understand the power of preservation versus cashing out, here are some numbers from the report:

• The full preserver: A member who keeps all their retirement savings invested throughout their career is projected to replace 76.5% of their final salary at retirement.
• The serial withdrawer: A member who routinely drains their accessible savings pot every year is projected to achieve a replacement ratio of just 51%.

That is a massive drop in living standards in your golden years, simply because short-term withdrawals cut off the compounding process before it can take root.

The two-pot trap and short-term pressure

With the implementation of the two-pot retirement system in September 2024, access to emergency funds became easier – and South Africans are using it.

Of the 385 000 retirement fund members who made savings-pot withdrawals in the 2025 tax year, 67% withdrew again in the 2026 tax year.

Most of these withdrawals aren’t happening because people don’t care about their future; they’re happening because of immediate financial pressure, high debt burdens, and rising living costs.

However, treating your savings pot as a yearly bonus or regular income top-up destroys the very growth that the markets are trying to give you.

Four rules to lock in better retirement outcomes

If you want strong market returns to benefit your future, keep these core principles in mind:

1. Preserve whenever you can: Changing jobs or facing a tight month? Leave your retirement money where it is. Taking cash out early resets your compounding clock to zero.
2. Build an emergency fund outside of retirement: Having a separate short-term emergency fund (even a small one) prevents you from having to raid your retirement savings when life happens.
3. Save early and hit the target: Saving 15% of your salary over 40 years projects a comfortable 75% income replacement. Saving that same 15% for only 20 years yields just 27%. Time in the market is your biggest asset.
4. Get advice before making a move: Before withdrawing from a savings pot or changing fund options during stressful times, speak to a financial adviser or benefit counsellor to understand the long-term trade-offs.

It is encouraging to see market growth pushing retirement prospects in the right direction, but market returns are out of your control. What is entirely in your own hands is preservation and contribution habits.

Let the markets do the heavy lifting, but don’t pull the rug out from under your future self by cashing out early.