Once you retire or leave your employer, one of the biggest financial decisions you’ll face is what to do with your retirement savings. South Africans often choose to withdraw their savings in cash, but this choice can have lifelong consequences. That’s where retirement benefit counselling becomes invaluable as it helps members make informed decisions, avoid costly mistakes, and understand the true impact of cashing out.

Why the “withdrawal decision” matters so much

For many people, cashing out feels like a logical choice, especially during financial pressure. But withdrawing retirement savings earlier than planned can:

• Trigger high tax on the withdrawal
• Reduce your future income at retirement
• Push you further away from your retirement goals
• Delay financial independence
• Create long-term financial strain

What seems helpful today can set you back decades.

What retirement benefit counselling helps you understand

1. The true cost of withdrawing cash

Counselling doesn’t tell you what to do; it gives you the information you need to make a sound decision. This includes:

• How much tax you will pay on the withdrawal
• How much you would receive in hand
• What your retirement savings would be worth if left invested
• How the two choices compare over 10, 20, and 30 years

Most members are shocked to learn how much of their savings disappears to immediate tax and how much future growth they lose when cashing out.

2. The power of preservation

Benefit counselling shows the long-term impact of leaving your money invested. Even a small amount preserved today can grow significantly due to compounding. For example:

• Preserving R100,000 instead of withdrawing it could grow to over R600,000 in 20 years (depending on returns).
• Withdrawing that same amount might leave you with less than R70,000 after tax.

Counselling helps you see these comparisons clearly. Even a small amount preserved today can grow meaningfully over time. For example:  Preserving R100,000 instead of withdrawing it could grow to over R600,000 in 20 years (depending on market returns).  After tax, withdrawing may leave you with less than R70,000 in hand. Retirement benefit counselling shows you these side-by-side comparisons clearly.

3. Immediate cash needs vs long-term security

Life happens and it comes with unexpected bills, unemployment, or emergencies. Counselling helps members weigh:

• Do I need cash right now?
• Is there another way to meet this need?
• What are the long-term consequences of taking the money?

Sometimes withdrawing a portion or seeking financial assistance may be better than wiping out your entire retirement pot.

4. Your new retirement picture

Many people have no idea how far (or close) they are to their retirement goals.

Benefit counselling gives you a clear picture:

• How much you’ve already saved
• Whether you’re on track
• How this decision will change your retirement income
• What steps you can take to close any gaps

It empowers you with real numbers, not guesswork.

5. Your available options

While we won’t offer you advice, retirement benefit counselling will help you to understand:

• Keeping your savings in the current umbrella fund (if available)
• - Moving your money to a preservation fund
• - Transferring into a retirement annuity
• - Situations where withdrawing a portion may be more appropriate than withdrawing everything
• Each option comes with its own tax treatment, flexibility, and long-term impact.

Each path has its own tax and long-term implications.

6. Why most members regret withdrawing

Many South Africans withdraw because they underestimate the future or overestimate how long they will work. We often hear, “I wish someone had shown me what this would cost me.” Benefit counselling exists to prevent regret.

So, should you withdraw or not?

There is no one-size-fits-all answer, but the guiding principle is simple: Only withdraw your retirement savings if there is truly no other option.

If your basic needs are covered and you can preserve your savings, your future self will thank you. Retirement Benefit Counselling gives you the facts you need to make a confident, informed decision. Before withdrawing:

• Understand the tax impact
• Compare long-term outcomes
• Look at your retirement goals
• Explore preservation options
• Consider the future cost of today’s choice

Your retirement money is for you, not for emergencies, not for short-term gaps, and not for impulse decisions. Before making a move, take the time to understand your options. Your future financial freedom depends on it.