Reaching retirement can be a bit of a daunting experience, especially if you aren’t fully informed of your different options at retirement, as well as their respective advantages and disadvantages.
At retirement, retirees can access up to one-third of their retirement savings in the form of a cash lump sum. However, they will need to invest the balance of two-thirds into an annuity, which is ultimately a financial product that provides a regular income to the product owner, during their retirement.
The two types of annuities are: 1) living annuity, and 2) life annuity. These are the basics to take note of:
Living annuity:
One of the main advantages of a living annuity is that it provides flexibility. Each year the investor can choose an annual income drawdown percentage of between 2.5% and 17.5%. The drawdown selected will be paid according to the investor’s preferred income frequency (which can be monthly, quarterly, twice a year, or once-off during the year). Another important consideration is that each year, the investor can adjust either the income drawdown percentage, the income frequency, or both.
Another advantage of living annuities is that they allow for having the remaining capital paid out to nominated beneficiaries when the investor dies, or to their estate in the case that no beneficiaries are nominated.
However, the main disadvantage is the risk of depleting the retirement funds before the investor dies. Therefore, it is extremely important to live within your means and not withdraw too much. Performance of markets can, of course, also have an impact on the period of time that the living annuity lasts. Thus, it would be advisable to invest your living annuity wisely, with an investment professional who can assist you with reaching your retirement goals.
Life annuity:
A life annuity provides a pre-determined monthly income, for the rest of the investor’s life. A life annuity is a good option for those who are anxious that their retirement savings may be depleted prematurely, or if they seek comfort by having a guaranteed income for the rest of their lives.
The income provided may either be a fixed rand amount, or an amount that increases with inflation each year. One of the issues with a life annuity is that the income is fixed/pre-determined, thus there is no flexibility offered. However, the main risk is that should you pass away, the money dies with you – effectively meaning there is no remaining capital to leave to your beneficiaries or estate.
Every investor has a different set of circumstances, It is, therefore, advisable to consult with an experienced, qualified advisor to make fully understand the options best suited to their personal circumstances and retirement plan.
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.
