The funds in your retirement annuity, preservation fund, pension or provident fund must be transferred into an income-generating solution when you’re ready to start using them to finance your retirement. In South Africa, you have three options available to you.
Preparing to retire
Turn your retirement savings into an income so can maintain your lifestyle when you stop working.
APPROACHING RETIREMENT
Retirement savings that work for you
Things to consider
Here are four important questions to ask yourself before withdrawing your retirement savings.
Do you have enough to retire?
It’s important to have a clear idea of what you’ve saved over time and what you can expect as a monthly income.
Do you plan to withdraw a lump sum?
You have the option of withdrawing a lump sum from your retirement funds when you retire (up to one-third on retirement annuities and pension funds; for provident funds it depends on when your contribution was made). While this can be helpful, bear in mind that it will also reduce your monthly income during retirement.
How will you invest your retirement savings?
You may or may not decide to make a lump-sum withdrawal from your retirement fund, but regardless of your choice, South African law requires that your retirement savings be invested in an income-generating product like a living annuity or life annuity.
How will you manage your income over time?
Depending on which income-generating solution you choose, you may be able to adjust the amount you withdraw each year. And if you need help with your decision-making, our financial advisers will be there to guide you every step of the way.
PRODUCT OPTIONS
What should you do with your retirement savings?
LIFE ANNUITY
Security
Provides you with a lifelong income that can increase every year – either by a percentage you choose or in line with inflation.
Pays your nominated beneficiary (a second life insured) an income for life after your death.
Cannot be left as an inheritance when you pass away. An exception is the Sanlam Income with Capital Preservation Plan, where an additional life cover policy pays a specified amount to your loved ones when you pass away.
Once you’ve started, you cannot make changes to the amount you receive each month or the rate at which the income increases.
LIVING ANNUITY
Flexibility
Pays out remaining funds to your nominated beneficiaries when you die.
Allows you to choose the underlying investment funds and adjust your income once a year.
Provides the means to protect the purchasing power of your income – by exposing the source of your income to market returns, you have the opportunity to let it keep pace with or beat inflation.
There’s no guaranteed payout and you may run short of money if you withdraw too much.
Fluctuations in the market will affect the value of your investment, which may affect the level of income you receive.
LIFE + LIVING ANNUITY
Best of Both
Allows you to provide for your dependants after your death.
Provides a guaranteed income for life.
Enables you to benefit from potential income growth over the long term thanks to investment growth.
The Living Annuity income can be adjusted to counter worse-than-expected investment returns.
LIFE ANNUITY
Security
Provides you with a lifelong income that can increase every year – either by a percentage you choose or in line with inflation.
Pays your nominated beneficiary (a second life insured) an income for life after your death.
Cannot be left as an inheritance when you pass away. An exception is the Sanlam Income with Capital Preservation Plan, where an additional life cover policy pays a specified amount to your loved ones when you pass away.
Once you’ve started, you cannot make changes to the amount you receive each month or the rate at which the income increases.
LIVING ANNUITY
Flexibility
Pays out remaining funds to your nominated beneficiaries when you die.
Allows you to choose the underlying investment funds and adjust your income once a year.
Provides the means to protect the purchasing power of your income – by exposing the source of your income to market returns, you have the opportunity to let it keep pace with or beat inflation.
There’s no guaranteed payout and you may run short of money if you withdraw too much.
Fluctuations in the market will affect the value of your investment, which may affect the level of income you receive.
LIFE + LIVING ANNUITY
Best of Both
Allows you to provide for your dependants after your death.
Provides a guaranteed income for life.
Enables you to benefit from potential income growth over the long term thanks to investment growth.
The Living Annuity income can be adjusted to counter worse-than-expected investment returns.
INVESTMENTS
What about savings in other investments?
Get expert financial advice
Speak to us now and get advice from an accredited financial planner.
Life Events
Every chapter of your life covered
Starting your career
There are few things more exciting than your first pay check. And few things more critical to your financial success than protecting your ability to earn an income. So make sure your future is safeguarded against illness and disability.
Getting married
The moment you say “I do”, you and your spouse are financially committed to one another for the long term. Take the time to explore your cover options and ensure that your financial future is secure should anything happen to one of you.
Buying a house
Putting down roots is one of the biggest financial commitments you’ll ever make. When it comes to applying for a home loan, make sure that the life cover you choose has a proven track record.
Having a baby
Starting a family brings with it great joy – and even greater responsibility. Make sure that your growing family’s future is secure by taking out life cover that is designed to support them financially should you pass away unexpectedly.