Living annuity drawdown calculator

Use this calculator to test how long your savings invested in a living annuity will support the income you want in retirement. Your chosen income level will equate to a percentage of your annual capital in the living annuity and this is known as your annual drawdown rate.  

Keep in mind that:

  • Your annual drawdown rate must be between 2.5% and 17.5% each year.
  • The calculator allows you to test an income level assuming your savings are earning returns in line with one of four different investment strategies. The returns used for these strategies are based on the average returns achieved by the relevant unit trust fund categories over either 10 or 20 years to December last year.
  • The calculator assumes you will increase your income by the inflation rate each year, which means your annual drawdown rate will change each year.
  • If you reach the maximum amount you can draw – 17.5% of your savings -  your income can no longer increase and its purchasing power, or after-inflation value, will decrease. As your capital is eroded, this maximum drawdown will be off a smaller base, resulting in a rapid decline in your income in after-inflation terms.
  • The calculator illustrates this by showing you the value of your income over your retirement years in today's rands.    

Please be aware that this calculator is not intended to provide personalised advice or recommend an appropriate drawdown for you.



Remember this, when you view the results

This calculator is offered as a guide only to give you insight into how long your savings could support a particular income level.

The results are based on the performance of relevant unit trust fund categories representing the investment strategies over the past 10 or 20 years.

However, past performance is no guarantee of future performance and the returns you actually earn may be very different. 

You will not earn the average annual returns of all the funds in a unit trust category and you will not earn an average return each year throughout your retirement.

Instead, you may earn a high positive return one year and a negative return the next. This volatility or the order in which you earn returns can have a significant impact on your drawdown level and the length of time your savings will support your income. 

When using a living annuity to provide an income in retirement you do not know how long you will live and should therefore plan for the longest life expectancy - around 30 years if you are retiring at age 65. 

Smart About Money's living annuity drawdown calculator should not be used in place of financial advice.

Determining appropriate income drawdown levels is best done with comprehensive financial advice that takes into account your personal circumstances and provides a full explanation of all the risks you may face despite the projected outcome.