Retire or Resign? Here’s What You Need to Know
As a government employee, you may find yourself weighing the decision between retirement and resignation. This choice is deeply personal and depends entirely on your circumstances—there is no one-size-fits-all solution.
In many cases, I’ve advised members to go the retirement route because of the distinct financial and lifestyle benefits it can offer. In this blog, I’ll walk you through five key advantages of retirement that might just help you make a more informed choice.
1. Guaranteed Gratuity Lump Sum
When you retire, you receive a gratuity lump sum. While resignation also offers access to your true one-third lump sum, the retirement gratuity is predetermined and fixed.
Why does this matter?
- For members who struggle with financial discipline, the predetermined value can actually be a benefit.
- It prevents overspending and forces you to plan your lifestyle around a set amount.
This kind of structure can offer peace of mind, especially if you’ve dealt with significant debt or poor money management in the past.
2. Stable, Predetermined Monthly Income
Retirement provides you with a set monthly income. This gross amount is taxed, but you know exactly what you’re getting every month. That means:
- No need to monitor markets.
- No need to choose investment products.
- No need to worry about hiring the right financial advisor.
For many, this kind of consistency and simplicity is a blessing. On the other hand, resignation gives you flexibility to increase or decrease your income. But with that flexibility comes the risk of poor financial decisions, especially if you’re tempted to draw more than your portfolio can sustain.
3. Annual Income Increases
One benefit often overlooked is that retirement income includes annual increases, determined by the pension fund.
However, a few things to keep in mind:
- These increases may not always keep up with inflation.
- Over time, if the increases are too low, your disposable income may shrink.
Despite these considerations, the fact that you receive automatic increases without needing to manage or adjust your investment is a key advantage for retirees.
4. Retention of Medical Aid Subsidy
This is a major factor in favour of retirement.
If you retire, you continue to receive your medical aid subsidy. This means:
- You can stay on your current medical aid option.
- You can move up or down in plan options, depending on your needs.
If you resign, however, you lose access to the subsidy and must fund your medical aid privately. Yes, private medical aid can be a great option with proper planning—but for many, the stability and cost savings of the subsidy are worth holding onto.
5. Spousal Income Continuity
Should anything happen to you, your spouse is entitled to receive an income for life. This is typically 50% of your income at the time of your passing.
For example:
- If your income is R20,000, your spouse would receive R10,000 monthly for life.
This creates long-term financial security for your family. However, it’s important to evaluate:
- Whether your spouse will be able to live comfortably on that income.
- If there are children, whether the income will support them too.
If leaving a larger legacy or inheritance is a priority, this may influence your planning—but the spousal benefit in retirement is undeniably a strong financial safety net.
So, Is Retirement Right for You?
Retirement offers structure, predictability, and security, especially if discipline has been a challenge. But remember, it’s not about which option is “better” – it’s about which option is better for you.
To make the most informed decision, I encourage you to attend our Retire vs Resign Masterclass or book a one-on-one consultation where we can assess your exact situation.
Final Thoughts
I hope this breakdown of the 5 retirement benefits has helped bring some clarity. If it has, let me know in the comments what your biggest takeaway was.
Stay connected, and remember: when it comes to your retirement or resignation journey, you don’t have to do it alone.
Disclaimers:
- Retirement Wellness SA is an Authorised Financial Services Provider (FSP 31609). This article provides information, not direct advice.
- This information is not provided by or on behalf of the Government Employees Pension Fund (GEPF). We do not act on behalf of the GEPF.
