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Are you a public servant considering early retirement? Here’s what you need to know

27 May 2019

All people face certain risks in retirement – arguably the biggest risk being inflation. When you are no longer earning a salary, it’s more important than ever that your money is invested correctly to allow it to grow, provide a sustainable income and keep up with inflation.

In addition, we all have our own personal goals, dreams and unique needs – and most times, fulfilling these requires money.

Have a plan

If you’re considering early retirement, you need a plan – not just for your investments – but a plan for how you’re going to use your free time. The funds that you have available, and your health, will largely dictate your daily activities.

Retiring as a public servant

If you have less than 10 years’ public sector service, you will receive a cash lump sum that is taxable. If you have more than 10 years’ public sector service, you will receive a taxable cash lump sum together with a monthly income.

Your lump sum needs to provide you with a sustainable, monthly income for the rest of your life or top up your government pension. There are options that allow you to continue to grow your capital amount invested, while providing you with a monthly income. Certain of these options also let you leave a legacy to your dependants. You may also choose a vehicle that guarantees your income for the rest of your life.

Advice is critical

In many cases, combining retirement income products may produce a better outcome. Those considering early retirement are encouraged to meet with a qualified financial planner who can take an objective view of your circumstances and help you construct a plan to meet your specific needs.