Two-pot retirement system: How to maximise your tax benefits<\/a><\/p>\nThe two-pot system reform<\/p>\n
According to Budhram, the two-pot System provides useful flexibility, but another withdrawal in the new financial year could set families back more than they realise.<\/p>\n
Under the two-pot retirement system, savings are divided into three parts: a retirement pot, a savings pot, and a pot unaffected by the reform. <\/p>\n
Meaning it holds all savings accumulated before the changes took effect in September 2024. <\/p>\n
This is officially known as the Vested Component and can be accessed upon resignation.<\/p>\n
You can access the savings pot only before retirement, as the rules allow only one withdrawal per tax year. <\/p>\n
However, the retirement pot cannot be accessed until retirement and continues to grow. Liezl says that this structural preservation is expected to significantly strengthen retirement outcomes over time.<\/p>\n
How to improve your family\u2019s financial security<\/p>\n
Budhram says that a professional adviser would typically explore these five questions to guide one in responsible decision-making:<\/p>\n
What is the exact emergency or situation making this withdrawal necessary right now?<\/p>\n
Have you explored every alternative that could possibly address this situation without using your retirement savings?<\/p>\n
Do you understand how this withdrawal will affect your future retirement income, and have we reviewed your updated projections?<\/p>\n
Will the after-tax amount you want to withdraw actually resolve the issue, or will you face the same problem next year?<\/p>\n
Do you know exactly how much tax SARS will deduct and what you will receive in your bank account?<\/p>\n
And then there was tax \u2026<\/p>\n
Many people are surprised by the impact of tax, which means that the net amount falls short, and the underlying problem remains. <\/p>\n
These questions help create a detailed conversation and decision-making process to determine whether other options may be better to protect long-term well-being.<\/p>\n
Financial advisers can assess options such as restructuring debt, adjusting budgets or negotiating payment terms. <\/p>\n
Even modest withdrawals reduce compound growth and affect long-term income. If the root cause is not addressed, withdrawals can become a recurring pattern that drains savings.<\/p>\n
\u201cWe encourage South Africans to pause, speak to a financial adviser and make choices that protect long-term financial security.\u201d<\/p>\n
READ MORE: You can draw from your two-pot savings again\u2026 but you probably shouldn\u2019t<\/a><\/p>\n\tSupport Local Journalism<\/p>\n
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