[READER QUESTION] 'I am 59 and want to retire at 60. My pension is R2 985 000. How much monthly income can I get if reinvest the funds in another pension fund?' Munaf Mukadam of GMInvestmentsZA replies. Moneyweb PensionFund
I am 59 and want to retire at 60. My pension is R2 985 000. How much monthly income can I get if reinvest the funds in another pension fund?I would like to first clarify the difference between retirement fund products and retirement income products. Retirement fund products include pension funds, provident funds, retirement annuities and preservation funds. All four of these products are used to save for retirement.
Unlike a pension or provident fund that can only exist if the employer has taken it out for its employees, anybody can take out a retirement annuity. A life annuity is where you purchase a guaranteed annuity/income from a product provider . This income will continue for life. You can then select your annual income escalations, a guaranteed term and whether you would like your spouse to receive an income after your death.
Therefore, from the perspective of the product provider, they will, on average, be paying out an annuity income to a female for a longer period, compared to a male. If we consider investing the R2 985 000 into a life annuity, the before-tax income you can expect is:
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