Leaving your current job also means leaving your retirement fund.
“Choose a job you love, and you will never have to work a day in your life.” This significant quote was made by Confucius around 550 BC and it is what most people in this world aspire to. However, few are able to achieve it, especially when you live in a country like South Africa, where the unemployment rate is officially at over 35%, and stable income often overrides job satisfaction.
Having a job is something you may be grateful for, but it may not always be the one you feel is your purpose or passion. You may spend years of your life working without getting any real pleasure out of it. Being stuck in an unsatisfying job can be very frustrating and detrimental to your personal life too, so while holding on to a job that allows you to pay your bills and to save for your retirement is valuable, finding a job that allows you to do all this AND energizes you every day, is invaluable.
However, in their haste to escape feeling stuck or bored, many people make the mistake of resigning without taking the time to really establish if a ‘better’ job they have been offered actually does fit them more. And sometimes, before even finding another job! While there are many emotional and practical reasons for sourcing ‘a better job’ that gives you more satisfaction, there are also financial implications to your decision to leave your current employer for a new opportunity – such as whether you have any leave pay due, and what happens to your retirement fund after you resign.
Most people don’t even consider what kind of employee retirement scheme they belong to, and how moving jobs will affect it. You may be a member of a pension fund, a provident fund, or even a group retirement annuity (RA). The rules governing how you can transfer savings from each of these do differ, so it is vitally important that you speak to a qualified financial advisor to ensure that you are making the best decision for you.
Another important decision to make is whether or not to cash out your retirement savings when changing jobs. Various industry surveys put between 70% and 80% of employees NOT preserving their retirement savings when they change jobs. Some people make the decision to resign based on the fact that they can cash out their retirement savings to carry them until they do find their dream job. It is one of the biggest and most common retirement savings mistakes, because saving money in your earlier working years grows exponentially with compound interest, and it is this money that works the hardest for your retirement. Unfortunately, South Africans do not have the best savings culture, but when you spend your retirement savings early, you lose all the growth and forfeit the power of compound interest which – when calculated – can be a staggering amount that you could have had if you’d just waited a little while to find another job.
Some people also forget that cashing out has massive tax implications too. It really is important for you to keep engaging with your retirement savings and your fund advisors, to remain financially empowered, to make empowered decision when it comes to resigning from your current position or changing jobs.
So, if the day arrives that your dream job is offered to you, and you have to leave the security of your current employment and make a risky career change for a job you really want to do – or if you’ve simply had enough of being dissatisfied in the job you get up and do every day – take time to consider all factors properly, to ensure you make the right decision, before jumping at the opportunity you think it is. Because the wrong decision can make a bittersweet choice just plain bitter and leave you in a worse situation than just harbouring job dissatisfaction. Sometimes, a dream job cannot override a nightmare retirement.
Never stop looking for the right job that will fulfil you. Studies show a very strong correlation between job satisfaction, and mental and physical health, so it’s important to keep looking for opportunities you feel passionate about and a job that lets you love what you do.
As Steve Jobs said, “Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking.”