---
title: "How to structure and secure a steady income after early retirement"
description: "You should consider a number of factors when structuring your retirement income after a retrenchment or early retirement."
type: "NewsArticle"
publisher: "Daily Maverick"
site: "https://www.dailymaverick.co.za"
section: "THE FINANCIAL WELLNESS COACH"
author: "Kenny Meiring"
author_url: "https://www.dailymaverick.co.za/author/kenny-meiring/"
canonical_url: "https://www.dailymaverick.co.za/article/2025-03-20-navigating-early-retirement-with-r8m-in-the-pot/"
published: "2025-03-20T11:14:52"
updated: "2025-03-20T11:14:55"
lang: "en-ZA"
word_count: 495
---

# How to structure and secure a steady income after early retirement

> You should consider a number of factors when structuring your retirement income after a retrenchment or early retirement.

By Kenny Meiring · Published 20 March 2025, 13:14 SAST · Updated 20 March 2025, 13:14 SAST

## Key points
- As you embark on your early retirement journey with R8-million in the bank, remember that a little financial finesse can transform your R30,000 monthly dream into a tax-savvy reality—just don’t forget to dust off those consulting skills for a side hustle.
- Early retirement at 60 with R5-million in a provident fund and R3-million in savings may be manageable with careful planning.
- Opt for retirement lump-sum tax tables to minimise tax on your severance package, but compare scenarios for the best after-tax outcome.
- A mixed approach of using savings for income can be more tax-efficient, potentially saving R54,000 annually compared with withdrawing solely from retirement funds.
- Consider consulting work to supplement income, reducing reliance on annuity and savings drawdowns.

## Content

**Question:** Our company is closing down and I’ve been put on early retirement.

I am 60 years old and have R5-million in my provident fund and R3-million in savings, which includes the severance package. I am concerned that this will not be enough, as I was planning on saving for five more years. I need an amount of R30,000 a month to live on.

**Answer:**The good news is that you should be fine with a bit of careful planning. There are a few factors you should consider when structuring your retirement income after a retrenchment or early retirement.

#### **Retrenchment**

As you are over 55, you have the option of having your retrenchment package taxed by using the retirement lump sum tables instead of the normal income tax tables. If you do use the retirement lump-sum tables, you will have used up a portion of your overall lump-sum tax allowance.

I would recommend that you compare both scenarios and see which will give you the best after-tax result for both your package and your pension. Speak to a suitably qualified financial adviser if you are unsure.

#### **Sources of income**

As you need R30,000 a month after tax, your pre-tax income should be about R37,000. Now, if you took all this money from your retirement fund, your drawdown rate would be 8.9%, which is too high to be sustainable.

This is not that efficient from an income tax perspective, as you will be paying R6,909 in tax each month, or R82,908 a year.

An alternative approach, which I prefer, is to supplement your income with your savings.

![Image](https://www.dailymaverick.co.za/wp-content/uploads/2025/03/Screenshot-2025-03-16-at-16.14.09.png)

The advantage here is that the drawdowns from your savings will trigger capital gains tax (CGT) instead of income tax. In your instance, no CGT will be payable. We are assuming that 10% of the income you receive here is a capital gain.

The solution is a lot more tax-efficient and will save you an annual amount of R54,000 when compared with the first option.

![Image](https://www.dailymaverick.co.za/wp-content/uploads/2025/03/Screenshot-2025-03-16-at-16.14.23.png)

#### **Life annuity or living annuity**

A life annuity typically gives you a larger monthly income than a living annuity.

This can be a solution if you are struggling to reach your monthly income target. To give you a sense of the possible numbers, **see the table below**.

You can invest a part of your retirement savings into a life annuity and part into a living annuity.

#### **Other work**

You do have a skill set and a lot of experience in your field of expertise. Do not discount the possibility of getting further employment or being able to supplement your income from consulting work.

If this does happen, you can reduce the drawdowns from your annuity and savings by the income you have earned. **DM**

*Kenny Meiring is an independent financial adviser. Contact him on 082 856 0348 or at financialwellnesscoach.co.za. Send your questions to*[*kenny.meiring@sfpadvice.co.za*](mailto:kenny.meiring@sfpadvice.co.za)*.*

*This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R35.*

![Image](https://www.dailymaverick.co.za/wp-content/uploads/2025/03/dm168-cover-14-Mar-1.jpeg)