How Much Should You Withdraw from Your Living Annuity Each Year?
This is a difficult question to answer, and one which many retirees are forced to grapple with.
In terms of current SARS practice, you are allowed to withdraw no less than 2.5% and no more than 17.5% of the capital amount of the living annuity fund per annum (for more information on annuities read our article “Life and Living Annuities (Q&A)”).
Let’s break this down…
For the purposes of this exercise, it is assumed that the growth in the nominal value, i.e. the actual percentage growth earned on the investment of ‘the capital’ in the living annuity fund, will increase in value by 10% per annum. Note, however, that this rate of growth is an assumption which may or may not be achieved.
A Brief Review of the First Quarter of 2014 and Events That Moved the South African Market
While we are constantly bombarded with news of crises in every corner of the world – from tensions in the Ukraine to missing planes – it is hard to keep track of which events are affecting us right down to the so-called bottom dollar.
To simplify matters, here is a brief look at some of the occurrences and currency shifts that have shaped the markets in a rather eventful (and as always, unpredictable) way in the first quarter of 2014:
Looking Ahead at Markets and Inflation
Following on from the “8 Curiously Common Mistakes That Investors Make” article and how it is often human nature to expect investment returns to only go up after a period of good returns, it is worth noting that a generally held view amongst asset managers is that we are going into a lower-return, higher inflation world. The point is it would be prudent to lower our expectations going forward.