Silver Digest March/April 2021

Page 20

MONEY

A D V E R TO R I A L

RISKS IN RETIREMENT ARE INCREASING – BUT YOU DON’T HAVE TO TACKLE THEM ALONE

A

n increasing risk in

By contrast, in a living annuity

retirement is that you

your income is determined by

will outlive your savings.

your investment strategy, offering

More retirees feel less confident

the flexibility to increase or

now that their savings will last,

decrease your drawdown rate in

highlighted by a 10% year-on-

order to sustain living annuity

year drop in confidence reported

income for life and leave capital

by retirees in Just SA’s latest

for beneficiaries. However, it is a

Retirement Insights study.

complex, self-managed product,

A less obvious risk, perhaps,

he warns, where your flexibility

is that of underconsumption in

comes at the price of high risk.

retirement. This could be due to

Thankfully, the South African

you being in the wrong type of

retirement market has evolved

vehicle, says CEO Deane Moore.

to meet the shortcomings in

You may feel compelled to hold

the annuity market and a third

back on spending due to the fear of

option is now available to retirees

outliving your savings, unless your

that combines the security and

vehicle gives you the certainty of a

comfort of a guaranteed income

stable, secure income. Given the volatile investment

with greater flexibility. Moore its effect on lifestyles. Yet there are

believes this blended option is

markets, there is also concern

steps you can take to best achieve

the best solution for retirees as

about the adverse effects

health and wealth in retirement,

it allows you to choose where

significant market movements

regardless of market conditions.

to position yourself on the risk

may have on your pension pot.

spectrum between your needs and wants. The life annuity

Plus-Skills, Moore said that when

CHOOSE THE BEST RETIREMENT INCOME TO SUIT YOUR NEEDS

people get a fright, they often do

Historically, retirement income

the living annuity component

the wrong thing when it comes

products were limited to

enables you to maximise long-

to their financial wellbeing.

an insurance product or an

term investment growth to

“As with last year’s investment

investment product, namely a

meet flexible financial needs

market crash, it is clear that many

life annuity or a living annuity. A

or to leave to beneficiaries. The

retirees bore the brunt of the fall

life annuity converts retirement

key differentiator of a blended

but then missed the recovery

income into a regular, guaranteed

annuity is that it is managed as a

when it came, due to moving out

income for life with the certainty

single retirement product. •

of markets too soon.”

that this income will never

Speaking at a recent holistic wellness webinar hosted by 50

These retirement risks are not

component mitigates the risk of running out of money, while

decrease, and offers ways to

Visit justsa.co.za for more

new but may have been exacerbated

protect against inflation. It is low

information or follow Just SA

with the Covid-19 pandemic and

risk, with low flexibility.

on Facebook and LinkedIn

20

SILVER DIGEST // AUTUMN 2021


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