Living Annuity Drawdown Rates 2026: How Much Can You Withdraw?
Understanding Living Annuity Drawdown Rates in 2026
If you have a living annuity in South Africa, one of the most important decisions you’ll make each year is choosing your drawdown rate — the percentage of your investment you withdraw as income.
Get it right, and your money lasts. Get it wrong, and you risk running out of funds in retirement.
What Are the Legal Drawdown Limits?
South African law sets minimum and maximum drawdown rates for living annuities:
- Minimum: 2.5% per year
- Maximum: 17.5% per year
You choose your rate annually, and it applies for the full year. Once set, you cannot change it until your next anniversary date.
What Drawdown Rate Should You Choose?
Financial experts generally recommend a sustainable drawdown rate of 4-5% for most retirees. Here’s why:
| Drawdown Rate | Risk Level | Suitable For |
|---|---|---|
| 2.5% – 4% | Conservative | Younger retirees, those with other income sources |
| 4% – 6% | Moderate | Most retirees aged 65-75 |
| 6% – 10% | Higher risk | Older retirees (80+) with shorter time horizons |
| 10% – 17.5% | Very high risk | Only if you have other guaranteed income |
The 2026 Challenge: Inflation vs Returns
With South African inflation currently around 3.6% (CPI December 2025), your investment returns need to outpace both inflation AND your withdrawals to maintain your lifestyle.
Example: If you withdraw 6% and inflation is 3.6%, your investment needs to return at least 9.6% just to maintain your capital in real terms.
Common Mistakes to Avoid
- Starting too high: Many retirees choose 10%+ early on, depleting their capital too fast
- Not adjusting: Review your rate annually based on market performance
- Ignoring fees: Investment fees reduce your effective return
- No emergency fund: Keep 6-12 months expenses accessible outside your annuity
Living Annuity vs Life Annuity
Not sure if a living annuity is right for you? A life annuity offers guaranteed income for life — no drawdown decisions required. The trade-off is less flexibility and no inheritance for beneficiaries.
Get Personal Advice
The right drawdown rate depends on your age, health, other income sources, and lifestyle needs. A one-size-fits-all approach doesn’t work.
Contact Old Mutual Secunda for a personalised retirement income review. We’ll help you find the sustainable drawdown rate for your situation.
📞 017 620 3990
📍 Shop 27, Secunda Mall
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