Credit crunch for the golden years

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SIMON BROWN: I’m chatting with Andrew Fulton, director at Eighty20. Their recent 2025 Q4 Credit Stress Report is out. Andrew, we appreciate the time. Focusing on South Africans in their golden years – what we are seeing is an increasing aged population. This is a global trend, with medical advances and declining birth rates, but older folks are making up a more significant part of the population.

ANDREW FULTON: Yes, thanks for having us on the show. It’s certainly a demographic trend that we’re seeing globally and particularly in South Africa. The number of South Africans in their ‘golden years’ is growing and accelerating.

So we thought that we would do a deeper dive into them and their credit situation, just to give us an idea of how credit is affecting that demographic.

SIMON BROWN: And what are we seeing? In the immediate I kind of thought – to be clear, I’m not yet in that demographic so I speak from ignorance – that then credit would be fairly low in demand because of fixed income, but your data says otherwise.

ANDREW FULTON: Yes. We do a segmentation of all South Africans called the Eighty20 National Segmentation, and we have two elderly segments of 65-plus retired or elderly, or whatever term you want to use.

The one is ‘comfortable retirees’. There are two million more affluent. These are the people who had good jobs during apartheid, were able to save for their retirements, and actually the second most affluent of our segment.

The other segment is the ‘humble elders’. That’s four million at the sort of bottom of the pyramid, and financially vulnerable.

So we’re not looking at 65-plus as a general group, we are looking at those two different segments – and they do have very different credit holdings.

SIMON BROWN: What are you finding between the two, the ‘humble elders’ and the ‘comfortable retirees’? Who is taking the loans? Who is managing them well?

ANDREW FULTON: It is a really interesting conversation. If we look, the humble elders, the sort of financially vulnerable, are predominantly female, struggling financially. They really are that lost apartheid generation. They weren’t able to earn or save or invest, and now they’re retiring, dependent on the family and the state with Sassa grants or family. They took out about 610 000 loans in quarter four, which is quite a lot, but concentrated in retail and personal loans. They don’t qualify for credit cards, so they’re using those two credit vehicles to cover their household expenses.

SIMON BROWN: And the ‘comfortable retirees’, where are they borrowing? I’m assuming there must be some loan activity happening in that space as well.

ANDREW FULTON: Absolutely. It’s a smaller segment, so it’s only two million people. All of those are credit active. They took out about a significant 230 000 new loans in quarter four. And 30 000 of those people do have a mortgage and make up about 13% of all home loans. So they are in that secured credit space because, as I said, they are the second-most affluent of our segments. But they’re certainly coming under pressure.

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They’ve scaled back on their secured credit since last year, probably due to repayment pressures with disposable income shrinking because of inflation and other costs. Yes, they are on a fixed income. The other thing that’s fascinating to think about with this group is they face particular biases and difficulties. They’ve got low financial resilience. They’re digitally excluded. They’re not able to kind of as easily go onto an iPad and take out a loan. They’re living on fixed, limited incomes. And let’s be honest, there’s age discrimination in many areas – the workforce, in lending, and in other areas. So it is quite a marginalised group in that way in that space.

SIMON BROWN: Do we see higher or worsening default levels in the sort of ‘older’ – or is that not something you looked at?

ANDREW FULTON: We actually did look at defaults in that particular area. So we saw a sustained rise in the number of defaulters, which is accelerating rather than stabilising. What’s particularly worrying about that is that with the general population, the number of defaulters has declined every quarter since 2023, and the 65-plus moving in the other direction.

That makes them unique among our age segments and obviously also particularly worrying.

SIMON BROWN: And as you are saying, it paints a depressing picture because if I find myself in a bad credit situation, I could get a second job, I could get a side hustle, I could try something on my mobile. But for a senior, a retiree, it’s a whole different game. In theory they’ve finished earning now; they’re now in the spending part.

ANDREW FULTON: Exactly, exactly. If you read the research on retirement it is quite frightening. It’s sobering. FNB finds that only 10% of South Africans believe they’ll be able to retire comfortably at age 60. And now with the two-pot system what we’re seeing is that a lot of people are making that future situation even worse to pay for today’s needs and expenses. They’re withdrawing money and they’re not replacing that. So it is sobering.

SIMON BROWN: And as part of that, the 10X Retirement Reality Report always comes back to that 6% number – it’s probably a global number, but it’s definitely applicable here. Of course, it’s not just that your income is fixed or maybe you’re getting growth, a fixed annuity or something like that, but your costs are typically well ahead of inflation. I’m thinking of medical costs; those are not sort of going along at 3%, 3.5% a year.

ANDREW FULTON: Absolutely. That’s when you’re experiencing probably your highest medical expenses in your life. That’s when all those things start breaking down. We’ve seen medical expenses are typically double CPI. So if you didn’t plan properly during your career that can come back to bite you.

SIMON BROWN: It absolutely can. The key lesson is to try to not be in that 94%; try to be in the 6%. It is easy for me to say; it harder for some to do it.

We’ll leave it there. Andrew Fulton, director at Eighty20, appreciate the time.

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