With your retirement savings – no matter how big or small – you’re going to reach a point when you need to make a decision on what you’re going to do with that money.
The first decision you need to make is how much cash you’re going to withdraw from your retirement savings at the point of retirement.
You’re allowed to withdraw up to 1/3rd of your savings in cash. (If you have a provident fund, as opposed to a retirement fund or pension fund, you might be able to withdraw more than that.)
BUT – we need to talk about tax.
Watch the video below where we give a short example to explain this:
What else is there to consider?
The second thing to consider is how much you actually need to withdraw initially. You need to chat to your financial advisor about your best options around this. Particularly because the only time you’ll have the opportunity to take this kind of lumpsum is at retirement. Some things your financial advisor might discuss with you include:
What debt do youhave at retirement?
Do you have an emergency fund?
Or, maybe you want to use this money to generate income for you in another way?
I am passionate about helping people understand their behaviour with money and gently nudging them to spend less and save more. I have several academic journal publications on investor behaviour, financial literacy and personal finance, and perfectly understand the biases that influence how we manage our money. This blog is where I break down those ideas and share my thinking. I’ll try to cover relevant topics that my readers bring to my attention. Please read, share, and comment. That’s how we spread knowledge and help both ourselves and others to become in control of our financial situations.