Living Annuity Calculator
South African living annuity calculator. 2.5%–17.5% drawdown range. Calculate monthly income, fund depletion timeline, tax impact, and sustainability. Includes 30-year projection with inflation adjustment.
Quick Calculator Get a fast estimate
R
The current value of your living annuity investment portfolio.
%
FSCA requires 2.5%–17.5% per year. Sustainable rate is typically 4–6%.
%
Expected annual return from your living annuity portfolio.
%
Monthly Income
R 12 500
Annual Drawdown Amount
R 150 000
Drawdown Rate
5.00%
Sustainability
Sustainable (fund grows)
Fund Value in 10 Years
R 4 440 733
Fund Value in 20 Years
R 6 573 369
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How Living Annuities Work
A living annuity lets you draw between 2.5% and 17.5% of your fund value each year. Your income depends on both your drawdown rate and investment performance. Drawing too much (above your investment return) will deplete your fund over time, leaving you with no income.
Financial planners generally recommend keeping your drawdown rate below your expected investment return. At a 9% return, a 5–6% drawdown allows your fund to grow in real terms. The widely referenced "4% rule" from US research suggests a 4% initial drawdown is broadly safe for 30+ years.
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Extended Calculator More options, charts, and scenario comparison
R
%
%
Monthly Income
R 12 500
Annual Drawdown
R 150 000
Net Annual Growth
4.0%
Fund Growing?
Yes
Living Annuity Key Rules
| Parameter | Detail |
|---|---|
| Minimum drawdown | 2.5% per year |
| Maximum drawdown | 17.5% per year |
| Rate change frequency | Once per year (policy anniversary) |
| Income taxation | Taxed as income at marginal rate |
| On death | Fund passes to nominated beneficiaries |
| Small fund withdrawal | Can take full value if fund falls below R125,000 |
| Regulation 28 | Not applicable — can hold offshore assets |
| Switching | Can transfer to guaranteed annuity at any time |
Drawdown Rate Impact at R3m Fund
Monthly Income = (Fund Value × Drawdown Rate) ÷ 12
R3,000,000 fund, 9% return:
2.5% drawdown → R6,250/month → Fund grows to ~R8.2m in 20 years
5% drawdown → R12,500/month → Fund stable ~R3.5m in 20 years
7% drawdown → R17,500/month → Fund depletes around year 32
10% drawdown → R25,000/month → Fund depletes around year 20
17.5% drawdown → R43,750/month → Fund depletes around year 12
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Living Annuity Details
R
%
%
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years
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Personal Profile
R
Sustainable drawdown rate at 9.00%% return: approximately 7.20%–9.00%. The "4% rule" suggests a 4% initial drawdown is broadly safe for 30+ years.
Monthly Net Income (Year 1)
R 12 473
Annual Drawdown
R 150 000
Income Tax on Drawdown
-R 321
Net Annual Income
R 149 679
Fund Outcome at Year 30
R 8 717 578
Year-by-Year Projection
| Year | Gross Income | Tax | Net/Month | Real Net/Month | Fund Value |
|---|---|---|---|---|---|
| 1 | R 150 000 | R 321 | R 12 473 | R 12 473 | R 3 120 000 |
| 5 | R 178 756 | R 5 497 | R 14 438 | R 11 655 | R 3 641 148 |
| 10 | R 221 351 | R 13 164 | R 17 349 | R 10 715 | R 4 392 278 |
| 15 | R 272 383 | R 25 172 | R 20 601 | R 9 735 | R 5 265 081 |
| 20 | R 333 030 | R 40 941 | R 24 341 | R 8 801 | R 6 270 632 |
| 25 | R 404 501 | R 61 223 | R 28 606 | R 7 914 | R 7 418 802 |
| 30 | R 487 989 | R 87 105 | R 33 407 | R 7 072 | R 8 717 578 |
Living Annuity Rules & Notes
| Rule | Detail |
|---|---|
| Drawdown range | 2.5% to 17.5% per year |
| Drawdown frequency | Monthly, quarterly, or annually |
| Rate change | Once per year on policy anniversary |
| Taxation | Taxed as income at marginal rate; age rebates apply |
| Estate | Fund passes to nominated beneficiaries (not estate) |
| Fund withdrawal | If fund drops below R125,000, can take full value |
| Annuity conversion | Can convert to guaranteed annuity at any time |
| Regulation 28 | Not subject to Regulation 28 — can invest in offshore assets |
Frequently Asked Questions
A South African retirement income product where you draw 2.5%–17.5% of your fund each year. Income depends on your drawdown rate and investment performance. Remaining fund passes to beneficiaries on death.
Generally below your expected investment return. At 9% returns, a 5–6% drawdown is broadly sustainable long-term. The "4% rule" suggests a 4% initial drawdown is safe for 30+ years. Drawing 8%+ significantly increases depletion risk.
Yes, at your marginal tax rate. Standard SARS tables apply including age rebates. If your total income (including living annuity) is below the tax threshold, no tax applies. Keeping drawdowns below your effective threshold can result in tax-free income.
The remaining fund passes to nominated beneficiaries, bypassing your estate. No estate duty applies. Beneficiaries can take a lump sum (subject to lump sum retirement tax) or continue drawing income as a living annuity.
Yes, at any time. You can use your living annuity fund to purchase a guaranteed life annuity (fixed monthly income for life). This provides income security but removes flexibility and the estate benefit. Often considered when the fund depletes to a level where guaranteed income makes more sense.