South Africans should think carefully about taking out of their pensions when changing jobs. <\/p>\n\n\n\n
According to Asavela Gwele, Investment Consultant and group RA Consultant at 10X Investment, it can be tempting for people to withdraw from their pension scheme and use the money for essentials when they change jobs or get retrenched. <\/p>\n\n\n\n
“For retrenched people especially, the temptation to withdraw from a pension can be incredibly large. After all, retrenchment packages only take you so far, and in a country with unemployment levels as high as South Africa\u2019s, walking straight into another job is highly unlikely,” said Gwala.<\/p>\n\n\n\n
That said, it can be incredibly risky to one’s ability to retire as it damages the impact of compound interest. <\/p>\n\n\n\n
“Ask any independent financial advisor, and they\u2019ll tell you that how long you invest is more important than how much you invest when it comes to retirement savings,” said Gwala. <\/p>\n\n\n\n
“They\u2019ll also tell you that the later you start saving for retirement, the more you\u2019ll have to invest to be able to retire. That\u2019s because of compound interest.” <\/p>\n\n\n\n
Moreover, it is worth noting that South Africans are actually poor savers, with the 10X Retirement Reality Report showing that just 6% of South Africans are on course to retire comfortably. <\/p>\n\n\n\n