The purpose of a pension fund is to provide you with secure income in your retirement. It removes the risk of you outliving your resources.
Retirement savings are a long-term investment, and should not be withdrawn or spent before you reach your objective of retirement.
Retirement planning is not a process that starts at retirement age, but throughout your working life.
Planning for retirement will ensure that you have paid off your debts and saved up enough funds to sustain your lifestyle throughout your retirement days.
However, there is a developing trend where employees resign from their jobs when they are only five years away from their retirement age so they can access their pension funds.
The workers resign with no alternative source of income or prospect of a new job, but with a plan to return to the same organisation and position they resigned from.
Once the funds have been accessed, individuals fall into the trap of satisfying their short-term dreams and goals, such as purchasing a car and renovating their home.
These retirement savings would have been originally put away to satisfy the long-term objective of retiring in a financially secure state.
This means that you can afford the lifestyle you choose to live, without depending on the government or anyone else to subsidise it.
Any retirement savings withdrawn will have tax implications.
Accessing your retirement savings before retirement age will result in higher tax implications than if you wait till retirement age.
Individuals of retirement age qualify for certain tax exemptions when withdrawing, which greatly decreases their tax liability.
Resigning to access your hard-earned retirement savings will result in the bulk of your savings being paid to the state through tax.
It is important to have different savings throughout your working life, for different objectives. There are investment vehicles you can consider using to save for your short-term goals.
Avoid the temptation of using retirement savings for short-term goals because there is a high chance your long-term goal will suffer.
It is always good to consult a financial adviser when making decisions that will affect your financial future.
lFor more, call the Financial Services Board on 011-428-8000, or Inkunzi Wealth Group on 087-160-0018
Retire with money for your lifestyle
The purpose of a pension fund is to provide you with secure income in your retirement. It removes the risk of you outliving your resources.
Retirement savings are a long-term investment, and should not be withdrawn or spent before you reach your objective of retirement.
Retirement planning is not a process that starts at retirement age, but throughout your working life.
Planning for retirement will ensure that you have paid off your debts and saved up enough funds to sustain your lifestyle throughout your retirement days.
However, there is a developing trend where employees resign from their jobs when they are only five years away from their retirement age so they can access their pension funds.
The workers resign with no alternative source of income or prospect of a new job, but with a plan to return to the same organisation and position they resigned from.
Once the funds have been accessed, individuals fall into the trap of satisfying their short-term dreams and goals, such as purchasing a car and renovating their home.
These retirement savings would have been originally put away to satisfy the long-term objective of retiring in a financially secure state.
This means that you can afford the lifestyle you choose to live, without depending on the government or anyone else to subsidise it.
Any retirement savings withdrawn will have tax implications.
Accessing your retirement savings before retirement age will result in higher tax implications than if you wait till retirement age.
Individuals of retirement age qualify for certain tax exemptions when withdrawing, which greatly decreases their tax liability.
Resigning to access your hard-earned retirement savings will result in the bulk of your savings being paid to the state through tax.
It is important to have different savings throughout your working life, for different objectives. There are investment vehicles you can consider using to save for your short-term goals.
Avoid the temptation of using retirement savings for short-term goals because there is a high chance your long-term goal will suffer.
It is always good to consult a financial adviser when making decisions that will affect your financial future.
lFor more, call the Financial Services Board on 011-428-8000, or Inkunzi Wealth Group on 087-160-0018
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