Securitas® Financial Group
Why Withdrawing From Your Retirement Savings Could Be the Most Expensive Decision You Ever Make – Especially Under South Africa’s Two-Pot System
There is a number that deserves more attention than it is getting. Of all the claims submitted from retirement savings pots in the first week of March 2026, only 5% came from first-time claimants. The remaining 95% had been here before. In fact, 62% were making their third withdrawal since the Two-Pot system launched in September 2024, and among those who claimed, the vast majority requested 100% of what was available (IOL Personal Finance, 2026).
That pattern matters. Because what begins as emergency access is gradually becoming a habit. And habits, compounded over a working lifetime, have consequences that are very difficult to reverse.
Two-Pot system
What the Two-Pot System Was Designed to Do
The Two-Pot system was introduced to solve a specific and well-documented problem. Before its implementation, many South Africans were resigning from their jobs simply to access their retirement savings during periods of financial pressure. They were dismantling years of contributions to survive a difficult month. The system was designed to prevent that.
By dividing contributions into two components: a savings pot accessible once per tax year, and a retirement pot locked until retirement. National Treasury created a structure that offers limited relief without gutting long-term security. One third of contributions from 1 September 2024 flows into the savings pot. Two-thirds are preserved in the retirement pot. The minimum withdrawal from the savings pot is R2 000, and every rand taken out is taxed at your marginal income tax rate (ASISA, 2024).
The intention was sound. A pressure valve, not a revolving door. But the data suggests the distinction is being lost.
Securitas® Financial Group
The Real Cost of Each Withdrawal
Most people focus on the rand amount they receive. That is understandable. But it is the wrong number to focus on.
The first cost is tax. Savings pot withdrawals are added to your annual income and taxed at your marginal rate, which can reach 45%. A R30 000 withdrawal does not put R30 000 in your account. For anyone earning near a tax bracket threshold, the withdrawal can push their income into a higher bracket, increasing the rate applied to their other earnings as well. Many people only discover this when their tax return is assessed.
The second cost is less visible, but far larger: the loss of compound growth.
As explored in Why Investing is Important, But Reinvesting is Essential, every rand that stays invested earns returns, and those returns go on to earn returns of their own. Interrupt that process and the long-term cost grows disproportionately to the short-term relief received. A single withdrawal does not just reduce your balance today. It reduces the base on which every future return will be calculated for the remainder of your working life.
For younger members, especially, the numbers are significant. Every R10 000 withdrawn from a retirement fund today does not simply cost R10 000. Depending on how many years of compounding lie ahead, it can cost several multiples of that amount in lost purchasing power at retirement. The money feels small now. Its absence will not feel small later.
Financial pressure
Who Is Withdrawing, and Why
It would be easy to frame repeated withdrawals as financial irresponsibility, but the data does not support that framing, though.
As of early 2026, total withdrawals from the savings pot have exceeded R60 billion. The most common reasons given are debt repayment, school fees, and basic living costs. Research by Old Mutual Corporate confirms that withdrawals are driven by necessity rather than discretionary spending, with 34% used for basic living expenses, 26% for debt repayment, and 26% for emergencies (FAnews, 2026).
These are not luxuries. They are the expenses of households under genuine and sustained financial pressure. As mentioned by IOL, according to the Eighty20’s 2025 Q4 Credit Stress Report, 40% of credit-active South Africans are in default on one or more loans. When there is no emergency fund and no accessible credit, a retirement pot that allows withdrawals will be used. That is a rational response to a genuinely difficult situation.
But understanding why it happens does not change the cost.
Securitas® Financial Group
When Access Becomes a Pattern
The more concerning development is not that people are withdrawing. It is that withdrawal is becoming routine.
According to Alexforbes, 67% of members who made a claim in the 2025 tax year submitted another one in 2026. Thirty-one percent have now withdrawn in all three tax years since the system launched. The savings pot, originally intended as a last resort, is increasingly functioning as a 13th cheque.
This matters because compounding is not just disrupted by large withdrawals. It is disrupted by consistent small ones. Each year the pot is emptied is a year in which contributions accumulate, and then disappear, rather than compound. The retirement pot grows, but more slowly than it should. The gap between what members will have at retirement and what they will need gradually widens, year by year, without any single moment that feels decisive.
That is the nature of this kind of cost. It does not announce itself. It accumulates.
Withdrawing from your savings
The Case for Staying Invested
South Africa’s economic and political climate in 2026 is not straightforward. Rand volatility, global market uncertainty, rising living costs, and persistent household debt pressure make the idea of accessing savings feel not just tempting but rational. In the short term, it often is.
But retirement savings are not short-term instruments. They are long-term ones. And the case for leaving them untouched is not built on optimism about the economy. It is built on how compounding actually works.
Markets move through cycles. Recessions end. Currencies recover. Political uncertainty resolves or at least stabilises. What does not recover easily is the compounding that was interrupted while those events were unfolding. The cost of exiting, or in this case, withdrawing, is not felt during the period of pressure. It is felt at retirement, when the balance is smaller than it needed to be.
Staying invested is not a passive decision. In a volatile environment, it is an active and deliberate one. It is the decision that long-term evidence consistently supports. As one wealth management analysis put it, for investors with long planning horizons, remaining invested through volatile periods has historically delivered better outcomes than attempting to move in and out based on sentiment. Missing even a small number of the market’s strongest recovery days can materially reduce long-term returns (IOL Personal Finance, 2026).
Withdrawing from your savings pot during a period of economic pressure does not protect you from that pressure. It converts a short-term problem into a long-term one. And the long-term version, compounded across decades, is significantly more expensive.
Securitas® Financial Group
What to Consider Before You Withdraw
None of this suggests the savings pot should never be used. There are genuine emergencies for which it exists, and accessing it thoughtfully once is very different from emptying it annually.
The question worth asking before submitting a claim is whether the need is immediate and unavoidable, or whether it reflects a broader cash flow problem that a withdrawal will not actually solve. A single withdrawal from an unresolved debt spiral does not fix it. It delays it, at the cost of compounding.
Alternatives worth exploring first include reviewing monthly expenses for adjustments, approaching existing credit providers about restructured repayments, or building even a modest emergency fund alongside retirement contributions going forward. As discussed in How Tax-Free Savings Accounts and Retirement Annuities Fit Into the Picture, a complementary, accessible savings vehicle is one of the most effective ways to protect long-term retirement savings from becoming the first thing reached for in a crisis.
The Two-Pot system was a meaningful step forward for South African retirement policy. But the protection it offers only works if the retirement pot is allowed to do its job. Every time the savings pot is emptied, the system is working as designed, but the long-term outcome is not.
Securitas® Financial Group
Speak to a Financial Advisor
Whether you are weighing a withdrawal, have already made one, or simply want to ensure your retirement strategy is structured to withstand ongoing financial pressure, the most valuable step you can take is to get professional guidance before making a decision. A qualified financial advisor can help you understand the true long-term cost of withdrawing, identify alternatives you may not have considered, and ensure your retirement and wealth plan is structured to keep compounding working in your favour.
At Securitas® Financial Group, we believe that protecting your future means making informed decisions today, not reactive ones. If you are feeling the pressure to access your retirement savings, speak to one of our advisors before you do. The conversation could be worth more than the withdrawal.