In a living annuity, your remaining capital stays invested and you select an income within the permitted range. That freedom is the reason people choose it, and the reason it needs watching.
The value and future income depend on withdrawals, investment performance, fees and how long the money must last. You can usually choose from available investments, review the income rate at set intervals and nominate beneficiaries under the product rules.
But the income is not guaranteed for life. Withdrawing too much, suffering poor returns or paying high costs can deplete the capital.
The legal drawdown range is not a recommendation. The appropriate rate must be considered with other income, spending, age, asset allocation and tolerance for change. Beneficiary and estate treatment also need product-specific explanation.
Try this now
Find the latest living-annuity statement and record the capital value, annual income in rand, drawdown percentage, investment mix, total fees and next income-review date.
Ask your advisor
- How was this drawdown rate tested against lifespan and poor markets?
- Which income increases are assumed?
- What choices and consequences apply to beneficiaries?
Current retirement and tax rules govern living annuities. Verify them before changing income, investments or beneficiaries.
Next: Guaranteed describes the promise, not protection from inflation