Preparing To Retire | Plan-B BlueStar | Sanlam Financial Planners Cape Town

APPROACHING RETIREMENT

Retirement savings that work for you

Once you reach retirement, it’s time to draw on the savings you’ve been putting away over the years. You’ll need to decide how to manage your retirement savings in order to ensure that the funds you have are able to support you throughout your retirement years.

Things to consider

Here are four important questions to ask yourself before withdrawing your retirement savings.

It’s important to have a clear idea of what you’ve saved over time and what you can expect as a monthly income.

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.

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.

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?

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.

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LIFE ANNUITY

Security

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Provides you with a lifelong income that can increase every year – either by a percentage you choose or in line with inflation.

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Pays your nominated beneficiary (a second life insured) an income for life after your death.

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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.

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Once you’ve started, you cannot make changes to the amount you receive each month or the rate at which the income increases.

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LIVING ANNUITY

Flexibility

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Pays out remaining funds to your nominated beneficiaries when you die.

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Allows you to choose the underlying investment funds and adjust your income once a year.

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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.

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There’s no guaranteed payout and you may run short of money if you withdraw too much.

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Fluctuations in the market will affect the value of your investment, which may affect the level of income you receive.

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LIFE + LIVING ANNUITY

Best of Both

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Allows you to provide for your dependants after your death.

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Provides a guaranteed income for life.

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Enables you to benefit from potential income growth over the long term thanks to investment growth.

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The Living Annuity income can be adjusted to counter worse-than-expected investment returns.

INVESTMENTS

What about savings in other investments?

Investing any discretionary investments you have in an investment plan or endowment policy, together with your lump sum should you choose to withdraw it, is a good way to ensure that your savings keep growing. An investment plan gives you the freedom to choose the underlying investments and to add or withdraw funds at any stage, while an endowment policy offers you a long-term investment with additional benefits like tax efficiency and estate planning. An accredited financial adviser will be able to help you make the most of any additional retirement savings you may have.

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

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

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

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

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.