· Updated · Built around the Living annuity calculator
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At retirement most South Africans move their savings into a living annuity and choose what to draw each year. The law lets you take anything from {{min}} to {{max}} of the capital. The question that matters is not what you can take, but how long the income lasts once inflation keeps pushing up what you need - the inflation calculator shows how fast.
How a living annuity works
- You choose a drawdown between {{min}} and {{max}} of the value each year, and can change it once a year on the anniversary.
- The money stays invested, so the capital grows - or falls - with the markets. You carry that risk, not an insurer.
- The income is taxed like a salary (PAYE on the SARS tables - see the take-home pay calculator), with the higher rebates from age 65 and 75.
- What is left goes to your beneficiaries when you die - unlike a guaranteed life annuity. It is not part of your estate for estate duty, but your nominees pay income tax on what they take.
Slide your drawdown
You start at the drawdown you choose and want the income to rise each year with inflation. Once that would need more than {{max}} of what is left, the law caps it - from then on your income falls. The chart shows the capital, in rands of the day and in today's rands.
Reading the result
- Drawdown above your real return eats the capital. If growth after fees is 9% and inflation is {{cpi}}, the real return is under 5% - draw more than that and the capital shrinks in today's rands every year.
- The first years matter most. A market fall early in retirement, while you keep drawing, does lasting damage. This chart uses one steady growth rate, so real life will be bumpier.
- The capital never runs out completely - the {{max}} cap keeps a little back - but an income that has fallen to a fraction of what you need is the real failure.
- Planners often suggest staying around 4% to 5% at the start. That is a rule of thumb, not a sourced figure - test it with the sliders.
Your income and the tax on it
The full calculator adds the PAYE on the income for 2026/27 and what the capital is worth after 10 years:
Still saving? The retirement savings calculator shows what you are on track for, and the retirement lump sum tax calculator the tax on the cash you take at retirement.
Sources
- Drawdown limits 2.5% to 17.5% a year, changed once a year: the ASISA standard on living annuities, as applied by South African living annuity providers. Not re-checked at the primary source in this update.
- Living annuity income taxed as gross income under PAYE, with the 2026/27 rebates by age: SARS - rates of tax for individuals.
- CPI {{cpi}}: Stats SA consumer price index release, as used across CalcSA.
- Not verified from a primary source: investment growth and the 4% to 5% rule of thumb - both are assumptions.
Calculators used in this post
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