With your retirement savings – no matter how big or small – you’re going to reach a point when you need to make a decision on what you’re going to do with that money.

The first decision you need to make is how much cash you’re going to withdraw from your retirement savings at the point of retirement.

You’re allowed to withdraw up to 1/3^rd of your savings in cash. (If you have a provident fund, as opposed to a retirement fund or pension fund, you might be able to withdraw more than that.)

BUT – we need to talk about tax.

Watch the video below where we give a short example to explain this:

The second thing to consider is how much you actually need to withdraw initially. You need to chat to your financial advisor about your best options around this. Particularly because the only time you’ll have the opportunity to take this kind of lumpsum is at retirement. Some things your financial advisor might discuss with you include:

• What debt do you have at retirement? 
• Do you have an emergency fund? 
• Or, maybe you want to use this money to generate income for you in another way? 

No matter what you decide here, you’re likely going to have a capital amount left over, which you need to purchase an annuity with. That’s what we’ll be talking about in the next post. Stay tuned.

If you haven’t done so yet, subscribe to our YouTube channel so that you have access to the full series and get alerted when new ones are released. 

If you missed the first one, go watch this 3 minute video which discusses the things to consider when preparing for retirement. You’re never too young to start thinking about your retirement.

• Living annuities – With living annuities, the most important thing is that you understand the implications of how much you’re withdrawing each year.

• Guaranteed annuities – Guaranteed annuities are essentially an insurance product. They guarantee you an income for the rest of your life!

• Different types of guaranteed annuities – Different types of guaranteed annuities give you different increases each year. Compare that to your starting income.

• Pros & Cons: Living vs Guaranteed – With a living annuity you have less certainty but more flexibility. With a guaranteed annuity you have more certainty, but with some limits. 

• The blended annuity – A blended annuity is a combination of a living annuity and a guaranteed annuity. The idea is to determine what your essential expenses are.

• Your retirement options – Let’s recap some of the key points to ensure you understand all your retirement options and make the best decisions with your money.