Rédaction Africa Links 24 with Kenny Meiring
Published on 2024-03-17 21:28:26
As a 70-year-old pensioner, you are considering converting your living annuity into a guaranteed life annuity due to attractive annuity rates. A guaranteed life annuity provides a higher monthly income for life compared to a living annuity. The investment risk is shifted to the insurance company, and your pension is secured even if you live beyond 100.
However, in your case, where you only draw 2.5% from your living annuity, it may not be advisable to convert to a guaranteed life annuity. Drawing most of your income from investments has tax benefits, as you will only pay capital gains tax on that income. Additionally, the assets in your living annuity are outside your estate and won’t attract estate duty upon your passing.
To enjoy the benefits of both worlds, consider investing in a bond portfolio through your living annuity. With current attractive bond rates, you can lock in a high yield for the next 20 years, providing income security similar to a life annuity. By utilizing this strategy, the capital value of your investment will grow significantly, all while remaining outside your estate.
With proper planning, you can achieve the security of a guaranteed life annuity while maintaining the flexibility and growth potential of a living annuity structure. By investing strategically in bond portfolios, you can secure a stable income stream while maximizing the growth of your retirement fund for the future.
Kenny Meiring, an independent financial adviser, can provide more insights and guidance on financial planning. Feel free to contact him at 082 856 0348 or financialwellnesscoach.co.za. For any questions or inquiries, you can reach out to him at [email protected]
This article was originally published in the “Daily Maverick 168” newspaper, available nationwide for R29. Stay informed with valuable financial advice and news to make informed decisions about your retirement and investments.
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