Securing your income in shaky times
Old Mutual Losing your source of income due to retrenchment is daunting.
“Regardless of the state of the economy, retrenchment usually catches people by surprise and can lead to panic,” says Jaco Gouws at Old Mutual.
“The emotional shift from being employed to unemployed is stressful, and the added financial pressures of losing your income can make it very tough.”
Retrenchment cover can help to bridge this income gap. “Depending on the cover, retrenchment benefits are able to pay you up to six months’ worth of income. This gives you the freedom to look for a new job without the pressure of not earning a monthly income.”
Gouws suggests that on top of taking out retrenchment cover, it is a good idea to save for a rainy day. “Saving part of your income each month for an emergency, in addition to having retrenchment cover, will also help you to survive financially if retrenched.” Here are some useful steps to take if you’re currently going through retrenchment:
Inform your creditors about the retrenchment and make alternative payment arrangements for any debt settlements.
Do not cash out your pension savings as this has severe tax implications. Reinvest the money.
Know your legal rights and ensure your employer provides valid reasons and compensation.