Many South Africans are dipping into their two-pot savings account for funds over the festive season, but this may turn out to be a poor idea. <\/p>\n\n\n\n
Ther\u00e8se Havenga, Head of Business Transformation at Momentum Savings, explained how much going into your retirement savings can really cost someone.<\/p>\n\n\n\n
For example, she looked at three scenarios for accessing roughly R30,000 for a holiday. <\/p>\n\n\n\n
The first sees someone use their two-pot money. <\/p>\n\n\n\n
Introduced in September 2024, the Two-Pot system sees retirement savings placed into savings and retirement pots. <\/p>\n\n\n\n
The savings pot holds one-third of retirement savings from implementation and is accessible before retirement.<\/p>\n\n\n\n
The retirement pot holds the remaining two-thirds and is only accessible upon retirement.<\/p>\n\n\n\n
In Havenga’s example, the following information must be considered: <\/p>\n\n\n\n
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If you have left the money to grow in your retirement annuity, it would have grown to \u00a0R74 370 at a 12% growth rate before fees. This is called the opportunity cost. <\/p>\n\n\n\n
To pay back the actual cost and opportunity cost over the next five years, one will need to increase their monthly contribution by another R917 to restore their original maturity value. <\/p>\n\n\n\n
This results in a total repayment of R55 020 for the withdrawal.<\/p>\n\n\n\n
Credit card <\/strong><\/p>\n\n\n\n If one’s credit card is 21.75% (repo rate of 7.75% plus 14%) and they borrow R30,000 now, they will have to repay R825 per month over the next five years. <\/p>\n\n\n\n Thus, to get R30 000 will cost you R49,500, meaning you essentially waste R19,500. <\/p>\n\n\n\n Save up<\/strong><\/p>\n\n\n\n If you had been saving R370 per month for the last five years, and your investment grew at a rate of 12% before fees, you would now have R30,000.<\/p>\n\n\n\n Thus, the R30,000 payday will only cost you the R22,200 you contributed to your savings. <\/p>\n\n\n\n Looking at the results, it’s more damaging for someone to take out of their long-term retirement savings than to use their credit cards. <\/p>\n\n\n\n That said, saving upfront is the best way to prepare for the festive period. It will not only cost less than using a credit card or taking out your retirement savings but will be less than the actual cost (R30,000). <\/p>\n\n\n\n “The sums show just how much one benefits by saving upfront for big expenses like holidays, especially fancy holidays,” said Havenga<\/p>\n\n\n\n “Now I must just do my homework in advance so that my last-minute bookings don\u2019t cost me more after I had diligently saved for a holiday.”<\/p>\n\n\n\nThe same holiday of R30 000 at three different prices<\/strong><\/td><\/tr> <\/td> Save upfront<\/td> Credit card<\/td> Two-pot money<\/td><\/tr> Total cost<\/td> R22 200<\/td> R49 500<\/td> R55 020<\/td><\/tr> Monthly cost over 5 years<\/td> R370<\/td> R825<\/td> R917<\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n
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