Why I Discuss Resignation and Retirement for Government Employees

Last week, a member left a comment on my YouTube channel asking, “Why are you pushing government employees to resign?”

Let me be honest with you—when I first started in financial planning, I wasn’t just motivated. I was frustrated. My dad lost a lot of money—over R500,000—when he opted to retire, and he didn’t get the right advice. To be honest, it felt like he was robbed.

Growing up, we didn’t have much. My dad’s financial loss meant no savings, no safety net. While other kids were out playing with their friends, I was delivering newspapers because I just wanted to have enough money for my clothing. And despite graduating Grade 12 with amazing results, I couldn’t further my studies because my parents simply didn’t have the money.

So, when I got into financial planning and saw the mistakes my dad made due to a lack of knowledge, I made it my mission to ensure that other government employees and their families wouldn’t have to suffer like we did. But here’s the thing: over the years, I’ve realized that retirement isn’t a bad choice either.

In fact, I’ve guided a number of members to retire when it made the most sense for them. So, why do my videos often focus on resignation? Well, actually, they don’t. You see, I create these videos because of my purpose, and my purpose is to help empower you with knowledge to avoid costly mistakes like the ones my dad made.

It’s not about pushing you towards retirement or resignation. It’s about helping you make the best decision for your unique situation. In this video, I’m going to explain why government employees should not focus on retiring or resigning but should focus on financial freedom. Once you unlock the secret to financial freedom, you’ll know exactly which route is best for you.

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What is Financial Freedom?

Let’s start by understanding what financial freedom is. Simply put, financial freedom is the ability to live life without the fear of running out of money.

Wouldn’t it be nice to get to a place where you could live your life without worrying about running out of money?

There are many factors that come into play to reach this space, but the idea I want to plant in your mind is this: focus on living life from a place where you want to enjoy full financial freedom. When you do this, it doesn’t matter which route you take—whether you retire or resign. The important thing is that you know your outcome: full financial freedom.

Once you know your desired outcome, you can start asking yourself, Which route is going to help me get there? Which route will allow you to enjoy life without the fear of running out of money?

 

What Could Cause You to Run Out of Money?

Let’s take a step back and analyze what could cause you to run out of money. I want you to make a note of these factors if you have a pen and paper handy. You can pause the video now to make notes, and we’ll walk through some of them together.

1. Taxes

Taxes are a big factor. Think about it—if you end up paying more in tax, it could reduce the lump sum you receive. Whether you’re taking the gratuity or the true one-third, the more tax you pay, the less money you get. The same goes for your income side—if tax is high, the money coming into your pocket is going to be much less.

You also need to consider the length of time you’ll be paying taxes. If you live another 20–30 years, think about how much of your money will go toward taxes. Tax is a big secret to consider when planning your finances.

2. Bad Advice

Like the situation with my dad, bad advice can be detrimental. Lack of knowledge can lead to poor decisions, and bad advice can have ripple effects. Whether it’s from a tax perspective, investment choices, or even decisions about retiring or resigning, bad advice can affect everything.

Unlike a cracked screen on an iPad, bad advice isn’t visible upfront. You can’t see it, touch it, or taste it. You experience it only later when things don’t turn out the way you expected. If you’ve watched my videos or taken my masterclass, you know I’ve spent significant time helping government employees avoid these risks.

3. Listening to Colleagues

It’s easy to look at your colleagues’ decisions and think they have the right answers. But remember, their situation might be different from yours. You don’t know all the details of their financial situation. Their path might not be the best choice for you.

4. Investing

Whether you choose to retire or resign, you’ll likely receive a lump sum or monthly income, part of which may be invested. If you don’t invest properly, you could face tax issues, unnecessary risks, or market losses.

 

Tax Considerations for Government Employees

From a tax perspective, here are a few things to consider:

1. Gratuity vs. One-Third

If you’re retiring, you’ll likely receive a gratuity, which is taxed at a certain rate. If you’re resigning, you can access your true one-third lump sum, which might be taxed at a higher rate.

2. Income Tax

Any income you receive, whether from retirement or resignation, is taxable. Keep an eye on how taxes will affect your income over time.

3. Estate Duty

If you’re resigning and aiming to protect your legacy, you’ll want to consider the taxes that may arise upon death, particularly estate duty.

4. Capital Gains Tax (CGT)

Money in a bank account earns interest, and some investments are subject to capital gains tax. Be mindful of these taxes when planning your financial future.

Avoiding Bad Advice: Key Tips

Here are some tips to avoid bad advice and ensure you’re making informed decisions:

1. Don’t Sign Without Thought

Before committing to any decision, take your time to fully understand the situation. Review it with a financial planner to ensure it’s tailored to your needs, not just a generic solution.

2. Plan Ahead

Planning ahead is key. Don’t wait until the last minute to make these crucial decisions. Planning 6–12 months in advance gives you the time to make informed choices and reduces the risk of mistakes.

3. Test First

If you’re unsure about an advisor, test them with a smaller investment before committing larger sums. This allows you to gauge the quality of the advice without putting everything at risk.

 

The Power of Knowledge

Finally, lack of knowledge can lead to poor decisions. As I shared at the start, my dad’s mistakes were due to a lack of knowledge, and I don’t want you to make the same mistakes.

You have access to this YouTube channel, which has hundreds of videos designed to help empower you as a government employee. Additionally, my Retire vs. Resign Masterclass goes deep into all the key aspects of retirement and resignation, including income, tax, cap leave, and more.

I’ve also created a Pre-98 Tax Guide to help members who started before 1998 avoid tax mistakes and maximize their savings.

 

Conclusion: Take Charge of Your Financial Future

I hope this video has been helpful. Share your takeaways in the comments below, and remember: many government employees haven’t even started their retirement or resignation journey yet. Let’s work together to make sure every government employee is empowered and protected from making costly mistakes.

The YouTube videos are free—share the link with your family and friends. Let’s ensure that everyone is making better financial decisions and achieving the financial freedom they deserve. 

Disclaimers

Retirement Wellness SA is an Authorised Financial Services Provider – FSP 31609. This video provides information, not advice. Disclaimer: 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.

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