Being legally allowed to withdraw at a particular rate does not make that rate sustainable for a particular plan.
A drawdown is the amount withdrawn from invested retirement capital to provide income. Whether it is sustainable cannot be decided once and forgotten. The answer changes with investment returns, inflation, fees, tax, spending and remaining lifespan.
A drawdown that looks manageable at retirement may become strained after poor markets or repeated above-inflation increases. Conversely, an overly cautious income may create unnecessary hardship.
Percentages need context too. The rand income, investment value, age and income-increase pattern all matter.
Try this now
Record your current annual income withdrawal in rand and as a percentage of the latest capital value. Compare it with last year’s figures and explain what caused the change.
Ask your advisor
- What assumptions make the current drawdown sustainable?
- How often will we review income, performance, fees and lifespan?
- Which warning signs would lead to a spending or investment discussion?
Drawdown sustainability is personal and uncertain. Product limits, illustrations and general guidelines do not replace a current retirement-income review.