Retirement in the time of COVID-19
The global pandemic has highlighted the increased risk of death the elderly face if they contract COVID-19. Fortunately the majority who contract the virus will survive. But they may face another wholly unpalatable risk – the risk of not having a sustainable income for life in an environment where investment markets have crashed, and retirement savings have been significantly reduced.
Here are three considerations for people facing retirement in the time of COVID-19:
Your approach to retirement should be the same regardless of market conditions, and you should think about retirement savings in two pots
- The first pot should ensure you have enough sustainable income to cover your essential expenses for life.
- The second pot is for discretionary spending or to leave as a legacy.
- The way to secure the first pot with certainty is with a life annuity or by switching a portion of your assets in your living annuity to a lifetime income portfolio in your living annuity.
- Once your first pot is secured, you can consider options that provide flexibility, growth and a legacy for beneficiaries.
Great timing: annuity rates have increased significantly
- South African retirees are presented with a rare opportunity not seen in many other countries around the world.
- A unique combination between the COVID-19 market crash and the SA sovereign risk downgrade by rating agencies caused long-term interest rates on bonds to increase.
- Higher long-term interest rates is good news for pensioners because life annuity rates improved significantly. This means those in or close to retirement can purchase guaranteed income for life at some of the cheapest levels seen in decades.
- And the gain largely offsets the reduction in the market value of investments experienced by pensioners, meaning you can restore income sustainability to pre-crash levels or even better.
Just Lifetime Income is a retirement income solution that was designed to withstand adverse market conditions
- You could have peace of mind by locking in an income that is guaranteed for life, regardless of how long you live or what happens to investment markets, and targets growth with inflation in the long term.
- With Just Lifetime Income, you can secure a guaranteed lifetime income with annual increases that will benefit from any market rebounds.
- It is available for investment from retirement savings and discretionary savings, and is accessible within some living annuities.
Contact your adviser to find out more about Just Lifetime Income or read some our our latest media coverage. If you do not have an adviser, get in touch to find out more about our offering or request the details of an adviser in your area.
Do you need more information?
Our specialist team is on hand to speak to both advisers and individuals regarding your specific retirement income requirements.