Two-pot withdrawal: What to think through before you take money out

If you’re thinking about making a two-pot withdrawal, you’re probably not doing it because you suddenly feel like you need a bit of extra cash.

You might have a credit card that’s getting harder to pay off. A home or car repair you didn’t budget for. Rising medical costs. Or you might simply be trying to make your retirement income stretch further each month. 

So, first: Using money you can access when you genuinely need it doesn’t make you irresponsible. But it’s still worth looking at the decision properly before you tap withdraw. The savings pot is the part of your retirement savings you can access before you retire. Whatever you take out is taxed as income.

What will this money change for me today, and what am I giving up to get that change?

The short version

• You'll receive less than you withdraw. The money is taxed at your marginal rate, and your fund may charge a fee.
• What it costs you isn't only the amount. It's also the growth you give up over the years ahead.
• Weigh it against what you'd really do instead: a credit card, a missed payment, or a tighter two months.

Lots of South Africans have already made this decision

By 31 January 2025, SARS had approved more than 2.4 million tax directives for two-pot savings withdrawals.

And an Alexander Forbes survey of more than 8,200 members found that around 80% of claimants used the money to reduce debt or cover essential living costs.

A two-pot withdrawal can easily be framed as someone dipping into their retirement because they want money now. The reality is often much less dramatic and much more familiar: People are trying to make their monthly numbers work.

So if that’s where you are, there’s no lecture coming.

What is useful, though, is working out whether a withdrawal solves the thing that’s causing the problem or simply makes the next few weeks easier.

Don’t just ask what you can withdraw. Ask what it buys you

Say you can access R15,000 from your savings pot.

Seeing R15,000 available can make the decision feel very straightforward: There’s the problem, there’s the money, problem solved.

But try making the question more specific.

• What will that R15,000 actually do?
• Will it clear a high-interest debt completely, freeing up R1,500 in your budget every month?
• Will it cover one emergency that you’d otherwise have to put on a credit card?
• Will it give you enough breathing room to catch up on overdue accounts?
• Or will it cover a monthly shortfall that’s likely to be back again next month?

The first few examples could materially change your financial position. The last one might be telling you something bigger about your budget.

That doesn’t automatically mean you shouldn’t withdraw. It just means the withdrawal and the underlying problem need to be treated as two separate things.

Access to cash might be the immediate answer, but the missing information can be even more valuable. 

Three things to check before a two-pot withdrawal

You don’t need another 20-point checklist or a recap of the two-pot rules. You need enough information to see the trade-off.

Start with these three things:

1. What will you actually receive after tax?

The number sitting in your savings pot isn’t necessarily the number landing in your bank account.

Savings-pot withdrawals are taxed as income at your applicable marginal tax rate. SARS deducts outstanding tax debt in certain circumstances. For example, if your marginal rate is 26%, a R20,000 withdrawal pays out roughly R14,800 before any fund fee. So before mentally allocating every Rand you see on your retirement fund statement, find out what your expected payout actually is.

If you’re withdrawing R20,000 because you need R20,000 to settle something, discovering later that your net payment is materially lower can leave you with the same problem and less retirement money.

Know the usable number first.

2. What does taking the money cost future-you?

This is the harder part because the cost isn’t visible today. When R10,000 leaves your retirement savings, you’re not only giving up R10,000. You’re also giving up whatever that R10,000 could have earned while invested over the years ahead.

For example, purely as an illustration, R10,000 growing at 7% a year would become roughly R38,700 after 20 years, before inflation.

That doesn’t mean you should never touch the R10,000. It simply means the trade-off is bigger than the amount on the withdrawal screen.

If you want to zoom out and see how your retirement is tracking overall, use our retirement calculator. One withdrawal looks very different when you can see it as part of the whole picture.

3. What happens if you don’t withdraw?

Not withdrawing sounds like the financially responsible option until you look at the alternative.

• Would you put the expense onto a credit card?
• Miss a payment?
• Take out another loan?
• Fall behind on rent?
• Use an overdraft that’s already costing you money every month?

If the alternative creates an even more expensive problem, then that's important to note.

On the other hand, if not withdrawing means delaying a purchase, tightening spending for two months or using cash you’ve already set aside elsewhere, that tells you something different.

You’re weighing two real options to see which makes the most sense for you. 

Already withdrawn? That’s useful information too

Maybe you’re reading this after the money’s already been paid out. That’s fine.

There’s nothing productive about turning a past financial decision into something you now need to feel guilty about.

Instead, look at what the withdrawal tells you:

• If you used it to clear debt, what caused that debt to build up?
• If it covered groceries and bills, is your monthly income regularly falling short of your essential spending?
• If an emergency wiped you out, do you have enough of a buffer to deal with the next one?

You don’t need to fix all of that today. You do want to notice the pattern.

A withdrawal can be a useful signal that another part of your financial setup needs attention.

That might mean building an emergency fund slowly and restructuring debt. Reviewing recurring expenses. Getting more deliberate about what happens on payday.

Our financial buffers workbook can help you start working through that without expecting you to magically find thousands of spare rands overnight.

The goal is to give yourself more options the next time you need financial support. 

And employers should be paying attention too

There’s another side to the two-pot story that’s easy to miss.

If you’re in HR, People or Reward and a noticeable part of your workforce is accessing retirement savings to pay debt or essential expenses, that isn’t just a collection of unrelated personal financial decisions.

It’s data.

Financial strain weighs on people: outside and at work. An employee worrying about debt, overdue bills or whether they’ll make it to payday is still carrying that worry into meetings, shifts and their working day.

That doesn’t mean employers should police two-pot withdrawals or tell employees what to do with their money. It means withdrawal behaviour can be one more signal that tells you where people may need better tools, education or support.

Instead of asking, “Why are employees withdrawing?”, a more useful question might be:

“What’s happening financially across our workforce that’s making access to retirement savings feel necessary?”

If you don’t know, start by finding out. Wealthbit’s Financial Stress Survey Tool can help you get a clearer picture without relying on assumptions.

So, should you withdraw from your savings pot?

Maybe.

A two-pot withdrawal isn’t automatically a clever financial move, and it isn’t automatically a bad one.

The point is to understand what the money changes. Look at what you’ll actually receive after tax. Look at what you’re giving up over the longer term. Then look properly at what happens if you leave the money where it is.

Once you can see those three things, you’ve got a decision instead of a reaction.

And if you’re struggling to see how that decision fits alongside your debt, savings, retirement and everyday spending, that’s exactly where a bigger-picture view helps.

Your Wealthbit Financial Freedom Score gives you one place to see where you stand, what needs attention and which next move is likely to make the biggest difference.

Because sometimes the answer is to leave the money invested.

Sometimes you genuinely need it now.

Either way, knowing why you’re making the decision puts you back in control.

FAQs

1. Should I withdraw from my savings pot?

It depends on what the withdrawal will change for you. Before withdrawing, look at how much you’ll receive after tax and fees, what the money will solve right now, and what you’ll give up by taking money out of your retirement savings. It also helps to compare the withdrawal with the real alternative, such as using a credit card, taking out a loan or delaying the expense.

2. How is a two-pot system withdrawal taxed?

A withdrawal from your savings pot is taxed as income at your applicable marginal tax rate. This means the amount paid into your bank account may be lower than the amount you withdraw. SARS may also deduct outstanding tax debt in some circumstances, and your retirement fund may charge an administration fee.

3. How much can I lose by withdrawing from my savings pot?

The cost goes beyond the amount you take out today. You also give up the potential investment growth that money could have earned over the years ahead. For example, R10,000 growing at 7% a year would be worth roughly R38,700 after 20 years, before inflation.

4. Is it better to use my savings pot or take on debt?

That depends on the cost and impact of each option. If leaving your retirement savings untouched means taking on expensive debt, missing payments or relying on an overdraft, a withdrawal may be worth considering. Compare the cost of the debt with the tax, fees and lost future growth associated with the withdrawal before deciding.

5. What should I do after making a two-pot withdrawal?

Use the withdrawal as information about your wider financial position. Look at what caused you to need the money, whether that issue is likely to happen again and what could give you more options next time. That might include rebuilding an emergency fund, reviewing your budget, restructuring debt or checking whether your retirement plan is still on track.