Spending Your Pension Money

If not used wisely, you may end up having to rely on your family to support you

- Boitumelo Matshaba

EVERY month, you work hard and contribute money to your pension fund. You hope to live a good and comfortable life when you retire and no longer earn a monthly salary. Some people buy expensive cars and go on holiday, while others invest the money they get from their pension fund. Find out what you should really be doing with your pension money.

According to the South African Labour Guide, the aim of a pension or provident fund is to provide benefits for its members when they retire. The difference between a pension fund and provident fund is that if a pension fund member retires, the member gets only one third of the total benefit in a cash lump sum and the other two-thirds is paid out in the form of a pension over the rest of the member’s life. A provident fund member can get the full benefit paid in a cash lump sum.

BAD SPENDING

According to financial advisor, Simmone Swartz, spending your retirement savings before consulting with a professional, who can advise you on the most appropriate post-retirement options for your unique situation, is irresponsible. Another bad decision is spending your retirement money before you officially retire.