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.
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SILVER DIGEST // AUTUMN 2021
