*This content is brought to you by Brenthurst Wealth
By Tanita Conradie*
Entering retirement is a defining moment in anyone’s life. It’s also a major milestone that forces you to finally face up to whether you’ve saved enough to support your retirement lifestyle.
This can be a harsh reality check for many when they sit down to plan how much income they can expect from their life savings. That sum will be determined mainly by how much you’ve saved, but also by how you choose to invest your savings in retirement.
What you’re looking for is a fine balance between growing your savings even while withdrawing from this pot.
Get the right financial advice
The dangers of getting this wrong are highlighted in the FAIS Ombud’s 2022 annual report that was released in November.
The report is littered with real-life cases that the Ombud adjudicated between investors and their advisors. One of the common complaints it sees is of investors drawing too much every year, meaning they run out of money too soon. This is especially true of living annuities, which allow you to draw between 2,5% and 17,5% of your savings every year.
In an ideal world, the growth of your savings will be higher than your withdrawal rate so that your capital depletes in a more orderly manner.
The Ombud report highlights that all too often advisors simply act on the wishes of the client in deciding how much to withdraw. In some cases, their chosen withdrawal rate is simply too high for the savings they have, meaning they won’t be able to sustain their lifestyle throughout their retirement.
That has obvious, and unthinkable, consequences. Especially if funds are invested in low-risk, but also low-return investments that don’t keep pace with inflation.
The impact of bad financial planning
As a general rule, we advise clients to withdraw between 4% and 5% when retiring. This withdrawal rate will help your portfolio grow over the long term, while still paying you a reasonable income.
The table below is a handy guide that shows the proposed maximum sustainable withdrawal rates for different age groups.
| FSCA Standard – proposed maximum sustainable withdrawal rates for living annuities. | ||
| Age | Male | Female |
| 55 | 4.5% | 4.0% |
| 60 | 5.0% | 4.5% |
| 65 | 5.5% | 5.0% |
| 70 | 5.5% | 5.0% |
| 75 | 6.0% | 5.5% |
| 80 | 7.0% | 6.0% |
| 85 | 8.0% | 7.0% |
# In the case of joint life = take rate for the youngest person minus 0.5%
Let’s see how different withdrawal rates affect your income, and how long it will sustain you.
If you decide to retire today and need a monthly income of R40 000 before tax (4% per annum), the value of your retirement savings would need to be about R12 million.
The following two scenarios compare the effect on your living annuity capital if you withdraw too much from the start of retirement versus if you start with a sustainable withdrawal rate.
| SCENARIO 1 | |
| Living annuity | R12 000 000 |
| Investment growth rate | 8% |
| Inflation rate | 6% |
| Income withdrawal rate p.a. | 7% |
| Monthly income before tax | R70 000 |
| Investment term | 30 Years |
| SCENARIO 2 | |
| Living annuity | R12 000 000 |
| Investment growth rate | 8% |
| Inflation rate | 6% |
| Income withdrawal rate p.a. | 4% |
| Monthly income before tax | R40 000 |
| Investment term | 30 Years |
As you can see, a more conservative drawdown of the same capital sum over the same period delivers life-changing results.
Remedies to consider
If you find yourself in a position where you’re withdrawing too much income from your living annuity capital, I suggest switching to a guaranteed annuity, also known as a life annuity. The advantage is that you are then guaranteed an income for the rest of your life based on your capital savings and a defined drawdown rate.
Or you could consider a joint life annuity, which means that if you as the contract owner of the guaranteed annuity passes away, your spouse will still receive an income.
Alternatively, you could look at a hybrid annuity. This is a combination of a living annuity and a guaranteed annuity, which has become very popular lately because of the extreme market volatility. With this option, part of your income is guaranteed, and the remainder still has exposure to the markets, which can be beneficial in the long term. The added benefit is that this model means some capital will be available to your beneficiaries.
The point I’m trying to illustrate is that there a variety of options are available. What’s most important is getting qualified advice to help you make the right decision. As pointed out in the Ombud’s report financial advisors are duty-bound to help clients make choices that will help them see through their retirement in comfort, not financial distress.
- Tanita Conradie, CFP® professional, is a Financial Advisor at Brenthurst
Megan joined the Brenthurst Wealth team in March 2026 as an Administrative and Fiduciary Services Assistant at our Val de Vie Office in the Western Cape. Prior to joining Brenthurst, Megan gained three years of experience in the retail sector, where she developed management and client service skills.
I obtained my National Diploma in Financial Information Systems from the Cape Peninsula University of Technology in 1999 and have worked in the wealth management industry since January 2000. Over the years, I have gained extensive experience in various roles, including Portfolio Manager Assistant, Planner Assistant, and Paraplanner.
Esmarelda Isaacs-Andreas joined the Brenthurst Wealth Stellenbosch office in October 2025, taking on the dual role of Receptionist and Fiduciary Administrator.
I obtained my National Diploma in Financial Information Systems from the Cape Peninsula University of Technology in 1999 and have worked in the wealth management industry since January 2000. Over the years, I have gained extensive experience in various roles, including Portfolio Manager Assistant, Planner Assistant, and Paraplanner.
Ashley joined Brenthurst Wealth in January 2025 as Office Administrative Assistant and Receptionist for the Stellenbosch Office.
René Heystek joined Brenthurst Wealth in November 2023, as receptionist and administrative assistant in the newly established George/Garden Route office.
Michelle Heystek has built a career in the financial services over the last two decades, after obtaining her B.Com degree in Financial Management in 2005. Once she joined Brenthurst in 2006, she continued her academic journey, obtaining her Certificate in Wealth Management from INSETA in 2007, followed by a Postgraduate Diploma in Financial Planning from the University of the Free State. In 2008, she earned the Certified Financial Planner (CFP®) designation.
Anelle joined Brenthurst Wealth as a Receptionist and Administrative Assistant to Brian Butchart in the Cape Town office in December 2023. She has a wealth of knowledge from working as a liaison between Financial Advisers and clients at TMA and Absa Investment Management Services (Aims) since 1998. She obtained her B. com degree from the University of Port Elizabeth in 1997.
ADMITTED ATTORNEY | FINANCIAL PLANNER & HEAD OF BRENTHURST FOURWAYS
Sanet was appointed in April 2020, joining our Cape Town team as an Executive Administration Assistant to Renee Eagar. She has been in the financial services industry since 1990. Her previous experience includes positions at Sanlam, BJM and ABSA. She spent her last 12 years working at Alexander Forbes Private Client Wealth as a Senior Wealth Management Assistant. She has received numerous accolades over the years which include but not limited to, Alexander Forbes Client Service Excellence – Silver award in 2014,2015 and 2017. Sanet has also obtained her Certificate in Wealth Management (NQF 5) in 2012 and achieved “Best Student of the Year” from Moonstone.
Maria Smit is a Certified Financial Planner® with over 10 years of experience in the financial planning industry.
