If you have sufficient capital on which to retire, you can use almost any retirement annuity on offer and preferably a combination of a living annuity and a guaranteed annuity.
Right now, 90% of pensioners, by amount, buy living annuities, investing R585-billion in 2018, with all their risks, as opposed to traditional annuities, where you carry little risk. He questioned if people never really understand what they are buying, and if they understand the charges and opportunity costs associated with living annuities.
Matthysen’s argument stands up here, namely whether your pension will last, at the required level with inflation increases to sustain your income needs, until you die. With a 7.5% drawdown at age 65, which is the average drawdown of its pensioners provided by Alexander Forbes research, you reach the point of ruin between the age of 71 and 73 years. The higher your drawdown, the sooner you will reach the point of ruin.Here the argument that living annuity product providers use is more honest. If you want long-term inflation protection, the only way to get it is by buying a traditional guaranteed annuity issued by a life assurance office.