Your best bet for a sustainable retirement income is to combine a good value-guaranteed annuity with a well-managed living annuity, leading financial advisers agreed at a recent Financial Planning Institute (FPI) conference. A guaranteed annuity offered you "insurance" against the risks of outliving your retirement capital, but there were a number of things seriously wrong with these pensions, advisers said. Every member of a pension fund, retirement annuity and, in the future, possibly a provident fund, must at retirement use two-thirds of their savings in these funds to buy an annuity — a sum of money or pension paid to someone regularly. Most South African retirees choose to generate a pension using an investment-linked living annuity in which they must decide how to invest their lump sum and then what level of income to draw from the investments as a pension. But these annuities involve complex decisions on how the investments will perform and the level of income that can be wit...

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