Navigating Retrenchment: A Financial Survival Guide
Retrenchment is traumatic, but a clear financial plan can free you to focus on re-establishing your career.
1. Cashflow Management
You must ensure your money lasts as long as possible. Start by identifying the “Gap”—the difference between your essential expenses and your remaining income sources (UIF, rentals, or contract work).
2. Protecting Retirement Funds
Do not be tempted to use your retirement payout for small debts or lifestyle expenses. I recommend transferring the full amount into a Preservation Fund.
- One-Withdrawal Rule: You are generally only allowed one withdrawal from a preservation fund before retirement. Do not trigger this during the initial transfer.
- Long-term Growth: These funds are critical for your future self; avoid drawdowns unless absolutely necessary.
3. Risk Cover & Medical Aid
Check if your group life/disability benefits have a “Continuation Option.” This allows you to take out an individual policy with no new medical exams. You often only have one month to act.
Do not cancel your medical aid. A break in cover can lead to waiting periods or exclusions later. If costs are an issue, drop to a lower-tier plan rather than stopping entirely.
Get Professional Guidance
The decisions made during retrenchment have long-lasting impacts. Working with a Certified Financial Planner® ensures you make the right calls during a high-stress period.
Secure Your Financial Wellness
Don’t navigate this transition alone. Let’s build a plan to protect your family’s future.
Kenny Meiring, MBA CFP®
Independent Financial Adviser | Financial Wellness Coach
Find a Financial Professional @ fpimymoney123.co.za
