As you get closer to retirement one of the biggest decisions you’ll face is how to turn your pension or provident fund or retirement annuity into a steady income. One of the most flexible ways to do this is through a Living Annuity.
A Living Annuity helps you draw income while keeping your capital invested. It gives you more control over your money and how it grows.
What is a Living Annuity?
A Living Annuity is a product you buy with your retirement savings. It lets you draw income every month or year while the rest of your savings stay invested.
You choose how much you take out each year between 2.5% and 17.5%.
Whatever is left keeps growing. When you pass away the balance goes to your beneficiaries.
Why Flexibility Matters
This is what makes a Living Annuity popular. You can change your income each year and move your investments around when your needs or the market change. You can also invest offshore and spread your risk globally.
Important Rules:
- You must withdraw at least 2.5% and no more than 17.5% a year
- You can’t withdraw the full lump sum unless the value drops below R125 000
- The investment keeps growing and any gains aren’t taxed
- Withdrawals are taxed like income
- You can leave the balance to your loved ones
Why Fees Matter So Much
Many people don’t realise how much fees eat into their retirement income. Even a 1% return difference adds up over time. We believe in keeping fees low and clear so more of your money works for you.
Understand Your Effective Annual Cost (EAC)
EAC shows what your investment actually costs each year. It includes advice fees admin fees fund fees and more. A lower EAC means more money stays in your investment and helps it grow.
Keep Up With Inflation
The cost of living keeps going up. A Living Annuity can help if your investments grow faster than inflation. But it depends on smart investing and not withdrawing too much too early.
A simple rule: Drawdown + Fees + Inflation ≤ Return on Investment
Use Our Living Annuity Calculator
Want to see how much income your savings could give you? Try our free Living Annuity Calculator. It shows how different drawdown rates and returns affect your monthly income.
What to Look For in a Provider
Not all providers are the same. Look for:
- Low transparent fees
- Local and offshore fund access
- Easy switching between investments
- Good support and real people to talk to
- No hidden charges
Is a Living Annuity Right for You?
It’s a great fit if you:
- Want control over your money
- Are comfortable with some market risk
- Have enough savings or extra income
- Want to leave something behind
If you prefer peace of mind and a fixed income for life then a Life Annuity might be better.
Compare Your Options
We’ll help you compare products and show you the numbers. Get a free Living Annuity Comparison Report and speak to a qualified Investonline adviser who will help you make sense of it all.
Final Thoughts
The best Living Annuity for you is one that keeps fees low gives you options and fits your retirement lifestyle. At Investonline we’re here to help you make smart choices and retire with confidence.
