Financial well-being is a complex, intergenerational, intra-family problem. Employee benefits go some way to provide a safety net to dependants, but a higher priority for many families may well be enabling dependants to become future financial contributors instead of perpetual dependants. As such, people generally have a keener interest in upward social mobility than retirement savings.
More specifically, the demographic challenge for South Africa for the next 30 years will be the youth, not the aged. The need to fund for retirement pales in comparison to the scramble to enable and empower the next generation.
The primary catalyst for the desired social mobility is education. If we as individuals only achieve a limited degree of financial security from our own jobs, we can still hold out the hope that, with the right support, nurturing and education, our children can achieve even more. There’s a compounding element embedded in educational attainment, as shown on the right. From this perspective, improving the educational standing of every family member should come with a payoff.
The economic principle at work here is that schooling is an investment. In a complete market, you should theoretically be able to invest in education until the marginal private benefit from that investment equals the private marginal cost. But in South Africa, investing in education for mobility demands a very different appreciation. The payoff is far more complex1.