Four reasons why not to withdraw from your retirement savings

Before you make a pre-retirement withdrawal from your retirement lump sum component, we urge you to pause and consider the following 4 reasons why not to:

1. Every R10 000 you withdraw now, could be R300 000 when you retire
   An early withdrawal can reduce your ultimate retirement by a factor of up to 30 times in nominal terms (6x in real terms)*. While the numbers become less dramatic when you shorten the period between early access and retirement, they remain retirement-defining (*read more here).
   
   
2. You will likely pay much more tax by withdrawing now
   Any withdrawal will be taxed at your marginal tax rate (45% for top taxpayers) as opposed to the preferential rates that apply to cash lump sums withdrawn at the point of retirement.
   
   Furthermore, any amount withdrawn is treated as income that could move you into a higher tax bracket.
   
   
3. Outstanding tax liabilities get first priority
   SARS requires that any outstanding tax liabilities must be deducted from your withdrawal amount before it gets paid into your bank account.
   
   
4. Access is not immediate
   Remember that the administrative process linked to access may take a couple of weeks. We are required to liaise with South African Revenue Service on your tax treatment before we can make any payment to your bank account.