Share

Why you should not cash out your retirement fund

Share your Subscriber Article
You have 5 articles to share every month. Send this story to a friend!
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
loading...
Loading, please wait...

When most of us think about our retirement, we consider lounging on the beach, playing with our grandkids or picking up a new hobby. Very few of us think we would still be working or struggling to make ends meet when we are in our senior years. Therefore we need to make sure to take care of our retirement funds to make sure that by the time that we are ready to retire we will be financially comfortable to do so.  

One of the reasons why people cash out on their retirement fund early is because they change jobs. A new job is an exciting change and new challenge that can mean the promise of career growth and a higher income; however it can also mean unexpected consequences for your retirement planning. You have three options on leaving one job for another if you have a company set-up retirement, provident or pension plan - you can cash in, you can transfer to another fund, or you can choose a combination of the two.

People typically change jobs between five and seven times throughout their lifetime, and one of the biggest retirement mistakes you can make is to cash in your pension plan when you move between jobs. Cashing in is very popular in South Africa, and many choose to cash out the retirement funds because they want to use it to pay off the debts. But using tomorrow’s money to pay off debts may not be the solution, as you will accumulate more debt once you need the funds, come retirement. In South Africa, 33% of retirees still have debt to repay once they've stopped working, and few can afford to retire because they have (mis)spent their retirement savings ahead of time. The option of cashing in your hard-earned retirement savings is an attractive one, but most people don’t realise the devastating effect it has on their long-term pension plan.

Read this for free
South Africans need to be in the know if we want to create a prosperous future. News24 has kept the country informed for 25 years, and we're about to enter a new chapter of fearless journalism. Join our free subscription trial to unlock this story and a world of news aimed to inform, empower, and inspire.
Try our free 14-day trial
Already a subscriber? Sign in
Rand - Dollar
19.09
-1.0%
Rand - Pound
24.06
-0.7%
Rand - Euro
20.58
-0.5%
Rand - Aus dollar
12.39
-0.3%
Rand - Yen
0.13
-0.9%
Platinum
894.64
-0.3%
Palladium
992.99
-0.9%
Gold
2,196.85
+0.1%
Silver
24.44
-0.8%
Brent-ruolie
86.09
-0.2%
Top 40
67,964
+0.4%
All Share
74,173
+0.4%
Resource 10
56,465
+1.4%
Industrial 25
103,617
+0.3%
Financial 15
16,480
-0.3%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders