The Boeing of retirement

When planning for your retirement, you want new ideas to construct an optimum solution, which can provide you and your family with a care-free retirement.

Air travel today is one of the safest ways to travel the world, but it has not always been this way.

The same is true for inventions in the retirement industry.

When retirement planning is done correctly, it could, however, simulate a Boeing flying high above turbulent weather conditions, generating massive time benefits.

Living annuities versus guaranteed living annuities.

Why living annuities are winning the race at attracting capital:

Trust levels are generally low towards traditional insurers, for many reasons;

Flexibility – portfolio construction and drawdown percentages are managed by the investor;

Unattractive guaranteed income offering at point of retirement (due to low interest rates) making retirement unaffordable to many;

General over expectation of market returns (drawdown rate) and underestimation of market risk (sequence risk); and

Bequest option for remaining capital at death. Can hybrid living annuities fly? What has recently hit the market is a unique combination of a living and guaranteed life annuity in a one product solution. The guaranteed annuity comes in the form of a with profit annuity. This means that retirement clients are partly insured (against longevity and market risk) and are partly self-insured.

Benefits of next generation hybrid living annuities:

Hybrid living annuities now host both a living and guaranteed life annuity in your chosen configuration (e.g. 70% living annuity and 30% guaranteed annuity);

Provides a transparent and comparable fee structure;

The future annuity income escalations rest on your own portfolio construction, and return results. This results in flexibility, potential higher investment returns, and therefore a higher annuity income escalation per year;

Hybrid living annuities now provide partial conversion option from your existing living annuity;

Medical underwriting is now available on some guaranteed life annuities; and

The remaining investment capital in your living annuity can still be bequeathed to beneficiaries.

Richus Nel is a financial advisor with Brenthurst Wealth

The guaranteed annuity comes in the form of a with profit annuity. Richus Nel Financial advisor at Brenthurst Wealth