The Life Surprises survey from Sanlam found the ‘surprises’ which most severely impacted respondents financially were the loss of savings, retrenchment and business closure. Whereas the ‘surprises’ with the biggest emotional impact were loss of savings, death in the family and non-vehicle accidents. It also found that most people were underprepared to deal with these surprises.

Regrets featured strongly among the surveyed age group, with 82.3% wishing they’d done more to prepare financially during their lives and 74.3% stating they would change their financial preparations. On a positive note, life surprises that had delighted respondents included an unexpected inheritance, a gifted child and landing a dream job.

As part of the project, respondents were asked to write a letter to themselves at the age of 20. Starting to save early featured most frequently in the letters. Advice to their younger selves included:

• Dear me: “Look after yourself and expect the unexpected. Don't waste money on things you don't need. Enjoy your life, because you only live once.”Dear me: “Love doesn't always last forever and divorce is devastating and costly. Protect yourself from unexpected costs and put money away for a rainy day.”
• Dear me: “Love doesn't always last forever and divorce is devastating and costly. Protect yourself from unexpected costs and put money away for a rainy day.”
• Dear me: “Be prepared for unexpected life events, by putting away money and protecting yourself financially - be wiser in your choices.”

The survey – commissioned by financial services provider Sanlam and conducted among 600 South Africans aged 50 and up – aimed to draw on the wisdom of the more mature portion of our population. Karin Muller, head of Growth Market Solutions at Sanlam, says: “We are hoping that the lessons from the older members of our society will inspire more people to get organised and plan for life’s unexpected events.”

Financial knocks - the knock-on effect

The extent to which financial knocks are also emotional knocks was the most eye-opening finding in the research, according to Muller. “We did not anticipate that loss of savings, loss of income, retrenchment or business closure would feature so highly on the emotional poll. The loss of savings or pensions savings, which had the highest financial impact, was also ranked to have the biggest emotional impact.”

She said that, while these big financial events will always be financially devastating, there are steps that can be taken to prepare for them, so the overall impact can be lessened. “Having an emergency fund equal to between three and six months of your monthly salary, a robust financial plan, appropriate insurance (risk cover) and an up-to-date will are good places to start when planning proactively for life surprises.”

40% of over 50s unexpectedly supporting others

The survey also found that a very high number of South Africans aged 50 and older were unexpectedly having to support others. Four in 10 of those surveyed (40.5%) had to provide for loved ones who they had not anticipated would become their responsibility. Muller says a good starting point is for families to have the difficult conversations about financial planning. “This will never be easy, as it does not come naturally to many families to talk about money, but being direct and working with a professional planner can help families have a better outcome in these situations.”

Other key findings

Seven out of 10 people surveyed obtained no financial advice (21%) or turned to sources other than professional financial planners for their financial advice (the largest alternate group being friends and family), with only 31.7% using a professional to plan their financial future. Muller says this is in line with human nature which often sees us listening to our peers over all others. “The role of the financial professional is being underused, perhaps because people underestimate the skill and expertise required to plan finances effectively. All financial advisers in South Africa must now hold a formal qualification which equips them to take a complete view of a person’s short, medium and long-term financial outlook to allow for strong financial preparedness. Of course a financial adviser can only do so much, as each person needs to be in the driver’s seat of their own life.”

Other findings were that 28.2% of respondents expected to outlive their partner, with 51.1% of these expecting to outlive them by a minimum of five years. Muller says outliving a partner carries with it a big financial burden and should from a key part of every financial planning exercise from both partners’ perspectives.

BOX – Letters from over 50s to their younger selves

Survey respondents were asked to write a note to their 20-year-old self, and this is what a few had to say:

• Dear me, please don't rush into marriage. Go to school, work hard and make something out of yourself.
• Dear me, don't make debt. It will land you in big trouble. Invest your surplus money in property.
• Hi me, start saving as early as possible. Don't follow your friends who tell you that you are still very young.
• Dear me, live life to the fullest, never give up on your dreams. Never let people show you the wrong way. Be smart, think wisely.
• Dear 20-year-old me, listen to the advice your parents give you. Save every penny that you have in case of an emergency. Look after your job and try to encourage your children to do the same.
• Dear me, get a job, you have a child on the way. Stop partying and start a family. Buy a house and save more money.
• Dear me, don't take life so seriously. Don't try to be perfect all the time and don't spend so recklessly.
• Dear me, you are smart and sexy and a very good lover. You should never get married. Just work hard and have fun with female friends.
• Invest in property. Buy your own home in your 30’s. Save a certain amount every month for unexpected expenses. Be financially comfortable when you marry and don’t rely on your husband for support. Don’t marry a gambler.
• Life is too short, enjoy it while it lasts. Live your dreams, travel overseas and just be happy. Get a good education to fall back on. Don’t make debt.
• Listen and learn from people with experience, Start a life cover with dreaded disease included. Start a savings plan with the first pay cheque.
• Love yourself, take good care of yourself. Save for the future, taking advice wherever applicable. Always be prepared for all of life’s challenges.
• Love doesn’t always last forever and divorce is devastating and costly. Protect yourself from unexpected costs and put money away for a rainy day.

BOX – summary of key findings

• 78.5% of people claim to have had unexpected life events (good or bad) in either their own lives or that of a member of their family.
• Just less than a third of the sample (28.2%)expect to outlive their partners.
• Of those who expect to outlive their partner, the majority (35.0%) are uncertain about how many years longer they will live, but just over a fifth (21.4%) expect to outlive them by between five and 10 years and 29.7% say they expect to live for more than 10 years after their partner dies.
• Over half expect to live well into their 80s but only 1.3% of believe they will live to be over 120.
• Most expect to die of old age (46%) or illness (13.8%).
• Half the sample (49.5%) reported a death in the family as being the event that has had the biggest emotional impact on them.
• 97.2% of those that lost savings or pension savings rated this event as having a devastating or high financial impact, whereas 93.7 % of people that faced the closure of their own business rated the financial impact as being devastating or high. 89.2% of people that lost their income or were retrenched rated this as having a devastating or high financial impact.
• People find themselves largely unprepared for the financial impact of these events.
• 40.5% currently support a family member that they were not expecting to support. Grandchildren (44%), children (43.6%), extended family members (20.2%), parents (12.8%) and spouses (11.1%) are cited most as having to be unexpectedly supported.
• Respondents have many financial regrets - 74.3% of the people surveyed would change something in their financial preparation and 82.3% wished that they had done more to be better financially prepared for life.
• Things that they would change: to save more of their earnings (54%), start saving for retirement earlier (47.5%), provide for unexpected life events (43.7%), spend less (42.6%)and get advice from a financial planner (14.3%).
• Over a third of the sample (31.7%) got their financial advice from a financial planner, but 28.5% did their own research and planning, and 23.2% got advice from their parents or no-one (21%).