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What does it mean to consume more with less risk?

Our April 2022 JustIn Adviser Newsnote explained what is currently driving the improved value of with-profit life annuities, and why allocating part of a pensioner’s living annuity to Just Lifetime Income (JuLI) allows them to consume more during their lifetime, at lower risk.

But what does this mean?

With JuLI – Just SA’s flagship with-profit annuity – pensioners can draw a higher income in retirement, with greater confidence.

Why is that?

In order for your living annuity to be sustainable, you should plan for your capital to last until at least age 95. And that generally means limiting your annual drawdown to the FSCA recommended drawdown rate.

But JuLI’s annuity rate is about 2,5% above the FSCA’s recommended drawdown rate. And it is guaranteed to continue for as long as you live, never decrease and annual increases are targeted to meet inflation.

So, an investment in JuLI allows pensioners to consume more (2,5% per annum more) at lower risk because there is a level of guaranteed income pensioners can rely on, which will continue for their whole lifetime. It is a practical solution to consciously consume (or spend) more in their active retirement years, knowing they have a safety net to better protect themselves from old age poverty.

More income, less stress.

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