Falling inflation boosts retirement prospects, says Multilink Financial Services CEO

Following last night’s State of the Nation Address (SONA), which highlighted economic recovery and falling inflation, South Africans can expect an improved outlook for retirement savings, says Pedri Reyneke, CEO of Multilink Financial Services.

The SONA highlighted a 20-year low in inflation alongside four consecutive quarters of GDP growth, signaling a shift towards economic recovery despite ongoing fiscal challenges. For ordinary South Africans, this translates into tangible benefits for long-term financial planning.

“Lower inflation changes lives, not just numbers,” says Reyneke. “It means the rand in your pocket goes further today, your savings grow faster over the years, and when you finally retire, you can live the life you planned for - without constantly worrying about rising costs. That’s why this isn’t just economic news; it’s personal news for every South African planning for their future.”

According to analysis by Multilink, declining inflation improves retirement outcomes in three critical ways:

1. Purchasing power - Money saved retains more value over time, meaning retirees can maintain a higher standard of living.
2. Long-term savings growth - Investment portfolios and retirement funds benefit from more stable, predictable growth as the cost of living stabilises.
3. Retirement projections - Financial planners can model retirement income with greater accuracy, helping consumers make confident decisions about contributions, withdrawals, and lifestyle planning.

“Many consumers underestimate the ripple effect of inflation on their retirement savings. Even a small drop today can compound over decades, creating substantially better outcomes when it matters most.”

A practical illustration: even a 1% drop in inflation can improve retirement fund outcomes by up to 5-7% over a 20-year horizon, compounding significantly over time.

The SONA also underscored government efforts to stimulate economic activity, including infrastructure investment, the Just Energy Transition, and incentives for investment in new energy vehicles. Combined with lower interest rates, these measures are expected to support both short-term financial stability and long-term savings growth.

“While the budget deficit and government borrowing remain areas to watch, the economic signals are encouraging for everyday South Africans. The current environment allows people to reassess and potentially increase retirement contributions, knowing that the compounding effect of lower inflation will work in their favour.”

Multilink Financial Services encourages South Africans to seize this opportunity to review their retirement plans.

“Lower inflation isn’t a number you ignore - it’s money in your pocket today and a bigger retirement tomorrow,” concludes Reyneke. “Those who plan now will be the ones living the retirement they’ve imagined, not the one inflation forced on them.”