Is Your Retirement at Risk Because of a Poor-Performing Living Annuity?

A lot of South Africans have been misled into thinking that organizing their retirement income is a complicated endeavor. It appears as if you need elaborate spreadsheets, complex calculations, and expensive financial advisors.

The truth is, achieving the retirement income you aim for from your living annuity largely depends on mastering two essential principles: keeping your fees low and optimizing your asset allocation. With these fundamentals established, you’re in a stronger position to enjoy the retirement you’ve diligently worked for.

Do you think your investments could be working harder for you? You can get a free comparison report from 10X Investments.

Fees: The unseen adversary of your retirement

Here’s a striking fact: a mere 0.5% difference in fees could result in 20% less income in retirement (you can verify our calculations here).

This is just within your accumulation phase. When you begin withdrawing income from your investments, the impact becomes even more pronounced. According to the 10X Retirement Reality Report, an astounding 50% of retirees are oblivious to the costs they are incurring or mistakenly believe that there are no fees.

Let’s clarify this with some concrete numbers.

The 10X Living Annuity charges 0.87% annually, which is less than one-third of the usual fee you might encounter. For amounts exceeding R5 million, the fees further decline.

Impact on a R3 million living annuity:

• Typical fees around 3% = approximately R87,000 annually (R7,250 monthly)
• 10X fees = R26,100 annually (R2,175 monthly)
• Your savings: R60,900 annually (R5,075 monthly)

This isn’t just about saving money – it’s about potentially extending the duration of your retirement capital.

The annual saving of R60,900, compounded over a 20-year retirement, could prolong your income sustainability by five to ten years.

You can receive straightforward information about your retirement investments from a 10X retirement expert at no cost. Simply reach out.

Asset Allocation: The driver of your returns

Long-term studies by Brinson, Singer, Beebower, and Hood show that asset allocation—investing in suitable asset classes, like equities or bonds—accounts for the majority of your investment returns.

This may surprise you; mainstream media often highlights stock picking and market timing. However, decades of research indicates that how you distribute your funds among growth assets (such as shares and real estate) and defensive assets (like bonds and cash) significantly influences your investment success.

Did you know the 10X Your Future Fund is designed to provide affordable access to a wide array of local and international asset classes?

For most working South Africans, it’s wise to consider a gradual risk reduction strategy: invest a larger portion in growth assets while you’re younger, then gradually shift to more defensive assets as you approach retirement. Nevertheless, don’t completely eliminate growth investments—your retirement might last for 20 to 30 years, necessitating continued exposure to growth assets.

Discover more in this article on 10X’s retirement investment strategy.

The ‘Golden Equation’ for retirement prosperity

Investment returns ≥ inflation rate + fees + income drawdown

This simple framework we refer to as the ‘Golden Equation’ outlines what to consider for a sustainable retirement. If you can balance these aspects by keeping fees low, choosing growth-oriented investments, and withdrawing a reasonable income during retirement, it becomes far more likely that you won’t exhaust your funds post-retirement.

A living annuity that not only supports your lifestyle but allows you to thrive

After years of saving for retirement, the last thing you want is an investment product that quietly erodes your wealth due to unnecessary fees and poor investment decisions.

Yet, this is precisely what many South African retirees face when they select the wrong living annuity provider.

Consider typical fees nearing 3% annually, various fund options that confuse rather than clarify, and a widespread lack of understanding among retirees regarding sustainable withdrawal strategies. For a retiree with R3 million, this results in approximately R87,000 annually in fees—funds that could have extended their retirement income.

You can get clear and concise details about your retirement investments from a 10X retirement expert at no cost. Just get in touch.

Sophisticated simplicity? Absolutely, and it works

The 10X Living Annuity adopts a radically different approach, aimed at reducing risks to sustainable retirement income.

Keep fees low and retain more of what you’ve earned

Every percentage point you pay in fees translates to less money in your pocket, decreased funds to grow your investment, and reduced capital to pass on to your heirs.

Get your effective annual cost (EAC) from your living annuity provider today, compare that cost to others, and… Stop. Paying. High. Fees.

Understand your fees! Utilize the 10X Effective Annual Cost calculator.

By sticking to three core principles, 10X strives to deliver what retirees genuinely need: consistent, inflation-beating returns.

• Strategic asset allocation grounded in long-term research rather than short-term predictions;
• Cost-efficient implementation achieved through extensive diversification instead of concentrated investments;
• Disciplined rebalancing based on valuation principles, not market fluctuations.

Switching is easier than you think

Many retirees continue with suboptimal living annuities, mistakenly believing that switching is complicated. It’s not.

Transitioning to 10X entails:

• No interruption of monthly income payments;
• All administrative tasks managed by 10X transfer specialists;
• Immediate benefits from lower fees.

The process generally takes four to six weeks, so contact the 10X Investment consultants today to learn more about the 10X Living Annuity or to obtain a comparison of your current retirement investments.

The information presented here serves as general insights and does not constitute financial advice. 10X Investments is an authorized FSP (number 28250). The 10X Living Annuity is underwritten by Guardrisk Life Limited.

If you found the video helpful, you can access more industry-leading insights and actionable, retirement-focused content on the Rands&Sense by 10X Hub.

Brought to you by 10X Investments.

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