Se­cur­ing your in­come in shaky times

The Citizen (KZN) - - PERSONAL FINANCE -

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.

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