If you have been forced into retirement it is essential that you speak with an adviser so you can understand your financial options. Picture: Freepik
Approximately 40% of South Africans that retired did not stop working voluntarily.
This is according to data from the 10X Investments Retirement Reality Report 2023.
Martin Hatidani, Senior Manager: Memberships, Retirement and Investments at NMG Benefits, said that there no laws in South Africa that compel people to retire.
According to Hatidani, people are allowed to work for as long as they like and employers cannot discriminate against the because of their age.
“What you do need to take into account, is that your employer may require you to retire at a certain age if stipulated in your employment contract or in their HR policies,” Hatidani said.
“Not being aware of this clause may leave you vulnerable to being forced to stop working before you’ve reached your retirement savings goals.”
According to Hatidani, being forced to retire can be a very emotional experience.
He advises people to take some time to cool off to avoid making irrational decisions. Vent to your friends and family but most importantly, speak with a financial adviser to ensure that your savings are optimised.
The first thing your adviser will suggest is to review your budget and to cut expenses wherever possible.
You should look to reduce your discretionary or luxury spending, like holidays, eating out, and entertainment may need to be reduced. You should also consider downsizing your home or car.
Your life insurance policies could be altered to reflect your current circumstances.
Hatidani said, for example, you may be able to cancel an income protection or disability policy, or reduce your life cover if you don’t have any debts.
The one area that you should avoid compromising on is your medical aid.
Instead, this is the time that you should be prioritising your medical aid contributions and move onto the most comprehensive plan you can afford.
“People over the age of 60 typically claim more frequently and for more expensive procedures and treatments than younger people. If you wait until you need treatment, and upgrade your plan at that point, you will probably be penalised with a waiting period,” Hatidani said.
Your financial adviser should also check the age at which you can start drawing on your retirement savings.
According to Hatidani, some funds allow policyholders to start drawing at age 55, while some require you to wait until 65.
“Ask your adviser about reinvesting available funds and find out the tax implications on withdrawals,” Hatidani said.
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