South Africa. Why income drawdown strategies in retirement do matter
Pensioners who buy a living annuity at retirement often consider their monthly expenses and draw an initial income that would cover these overheads.
Thereafter, a common strategy is to increase the rand amount of the drawdown with inflation every year. By law, retirees are allowed to draw between 2.5% and 17.5% of their capital as income in these vehicles.
But Jaco van Tonder, Advisor Services director at Investec Asset Management, argues that this is a poor income strategy.
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