South African Pensioners Exhaust Retirement Lump Sums in 14 Months as Withdrawals Top 4%-5% Rule
Updated
Updated · The Citizen · Aug 15
South African Pensioners Exhaust Retirement Lump Sums in 14 Months as Withdrawals Top 4%-5% Rule
1 articles · Updated · The Citizen · Aug 15
Summary
South African retirees who take cash lump sums at retirement spend them out in an average 14 months, according to the 45th Sanlam Benchmark Survey.
Momentum Investments says many pensioners are drawing more than the long-used 4% to 5% annual guideline, a pace that can undermine income meant to last 25 to 30 years.
A 5% starting drawdown assumes roughly 8.2% net annual returns to preserve living standards, while a 7% drawdown needs more than 11%; missing that higher target by 2% can cut sustainability by about a decade.
Barnard said market and sequence risk, inflation, emotionally driven switching and longer life expectancy all compound the danger of retirees outliving their savings.