Retirement

Stop risk from ruining your retirement

One of the most important decisions most people will make in their lifetime is the selection of a suitable retirement income solution – one that will provide a sustainable income for the rest of their lives.

According to Glacier Invest, many investors choose a living annuity to provide their retirement income. Living annuities will allow your hard-earned money to continue growing, as they’re linked to market returns. But at the same time, you take on the various risks yourself. These include market risk, which is the risk of a large market downturn, resulting in a drop in your capital. You also take on longevity risk, which is the risk of you living longer than your money.

The low-return environment we’ve experienced over the past few years, coupled with the ever-advancing medical field and generally healthier lifestyles, has meant that the financial future is very uncertain for a large number of investors.

In short, the traditional way of thinking about investing to produce a retirement income does not apply today.

SOLUTIONS

How to address these risks

Retirees need a solution that provides increased performance consistency, reduced overall drawdowns and returns that are still in line with the required level of income. This has led Glacier Invest to develop the Glacier Invest Living Annuity Income Solutions, a first-of-its-kind approach to portfolio construction.

These solutions make use of a smoothing mechanism to reduce volatility and include hedge funds that can outperform when other asset classes are struggling due to their reduced correlation with traditional asset classes. This will help to cushion the portfolio when markets are falling.

The smoothing technique used holds back excess returns when markets are high and releases these amounts back to investors when markets pull back. This means the investor will see less volatility over longer periods of time.

The solutions use an asymmetrical return approach, which simply means minimising downside risk and capturing as much of the upside as possible. There are five Income Solutions, catering for different risk profiles, each designed to reduce volatility in returns while preserving capital at the same time.

Glacier Financial Solutions (Pty) Ltd is a licensed discretionary financial services provider, trading as Glacier Invest FSP 770.

Sanlam Multi-Manager International (Pty) Ltd is a licensed discretionary financial services provider, acting as Juristic Representative under Glacier Financial Solutions.

The Glacier Investment-Linked Living Annuity is underwritten by Sanlam Life Insurance Ltd and administered by Glacier Financial Solutions (Pty) Ltd.