Help me spend my R10m

PENSION PAYOUT: TWO FINANCIAL ADVISORS ANSWER THIS READER'S QUESTION

- Ernst Van Biljon

I am retiring in five months at the age of 63. I have R5 million invested in a retirement annuity (RA) and R5 million invested in discretionary savings, all via eight exchange-traded funds (ETFs).

Almost all ETF investments are offshore in aggressive growth products. I can sustain myself on a 4% drawdown rate.

Can you please advise on the following:

► Should I opt for a pension by purchasing a guaranteed and a living annuity? If so, what should the split be?

► What is the most effective way to draw monthly from my RA and the eight ETFs?

► How long would my pension last, as I am commencing with a 4% drawdown rate?

Dear reader,

Please note that my response should not be considered advice or a retirement proposal, as there are many other factors to consider.

For instance:

► Is the drawdown income solely for you?

► Is a spouse/partner considered for a joint life annuity option?

► How important is preserving capital after death from any portion of the portfolio for beneficiaries?

► Are there any future capital needs during retirement, such as buying a new car?

► Do you already have an emergency fund?

And any other relevant considerations.

In broader terms, for the sake of general retirement knowledge, let's explore a basic model of a possible retirement plan.

Starting with your last question: