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Listen: Take this opportunity to boost your retirement income

by | Jul 28, 2023

In this podcast Maya speaks to Deane Moore, CEO of the Just Group about how to use a guaranteed annuity to boost your retirement income, even if you are already in retirement.

If you have a retirement annuity or a pension fund, you should know that when you retire, you can choose to take one-third of the fund in cash, but the other two-thirds need to be used to take out an annuity product that will provide you with an income for life.

If you are about to retire, you need to start thinking about what type of annuity product you should invest in, to provide you with this income for the rest of your life.

Use a guaranteed annuity to boost your retirement income

According to an article by the Actuarial Society of SA, there is currently a window of opportunity for retirees to lock in some of the highest rates in 20 years.

Moore says that over the past five years, there has been an increase in annuity rates of 33% for males and 43% for females for guaranteed life annuities with a 5% annual escalation in income and a 10-year guaranteed period.

Note that the current annuity rates are available only for new guaranteed life annuities, but, this presents a wonderful opportunity for retirees with living annuities who are drawing an income at an unsustainable rate.

Moore says living annuity investors who have no choice but to draw incomes above 5% to make ends meet, thereby eroding their capital, can convert their living annuities to guaranteed life annuities. He adds that a living annuity investor currently drawing an income of, say, 8% could potentially lock in the same level of income for life by switching to a guaranteed life annuity, because of the current high annuity rates.

Anyone buying a guaranteed life annuity now will lock in these current high rates for life. With inflation peaking and the cost of living rising, this is an opportunity not to be missed, and anyone currently in retirement or close to retiring should speak to their financial adviser to discuss their options in detail.

 

5 Comments

  1. Hi Maya, I see that Just SA are newcomers and offer really good life annuity rates . Is there any risk at all in going with them rather than one of the other large South African companies that have been with us forever and a day? Love your weekly newsletters by the way. Much appreciated.

    Reply
    • I have asked Just to provide some details about how they reinsure their book – but the main reason their rates are more attractive is because they underwrite – in other words, they look at the health of the person just as you would when taking out life cover. Someone who has not been well or has pre-existing conditions could get a better rate because life expectancy would be lower.

      Reply
    • Hi Allison, Just SA has a very strong capital solvency position and client service culture.
      All life insurers are regulated by the Prudential Authority in SA, and need to meet solvency capital requirements that prove they have enough capital to withstand a 1-in-200 year shock event. Just SA holds more than 4 times that requirement in SA and is a wholly owned subsidiary of the listed UK Group, Just. The Group has a credit rating of A on the international scale, which is significantly stronger than the SA Government and local financial institutions.
      Our client service culture is very important to us, which we capture in our value statement that “clients are at the heart of our business”. We would like our clients to experience that and welcome feedback, positive or negative, about their interactions.
      I’m happy to provide any further details https://justsa.co.za/contact/
      Regards, Deane Moore (CEO, Just SA)

      Reply
  2. Fantastic talk , thank you Maya 😊
    I am in the process of considering a life annuity which my financial advisor quoted me on but was a bit nervous , 69 y old and currently in a living annuity .
    So many points hit home for me especially about not being dependent on my child for support if I run out of money.

    Reply

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Maya Fisher-French author of Money Questions Answered

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