Retiring soon? 5 questions to ask about your lump sum vs. annuity

Choosing between a lump sum and annuity is one of the biggest retirement decisions. Here’s what to consider:

1. How much tax will you pay?

• Lump sum: First R550 000 is tax-free; amounts above this are taxed up to 36%.
• Annuity: Monthly income is taxed as per your income bracket.

2. Do you have other income sources?

If you own property (e.g., a rental flat) or have investments, a lump sum could supplement these.

3. How long do you expect to live?

Annuities provide lifelong income, but if you have health issues, a lump sum might be safer.

4. What’s the impact of the two-pot system?

From 2024, you can access a portion of your savings early – but retirees should prioritise preserving their “retirement pot”.

5. Have you accounted for inflation?

Annuities with annual increases (e.g., 5% escalations) help combat rising costs.

Next steps

Book your free 45-minute session with me today using the Contact button above.