Savings › Living Annuity Calculator

Living Annuity Calculator

See what a living annuity pays each month at your chosen drawdown rate, and how your income and capital could change over the years.

Your living annuity

Amount in the living annuity

Drawdown rate (2.5% to 17.5% a year)

Expected return a year, after fees

Inflation a year

Years to look ahead

INCOME NOW

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A month, before tax

INCOME IN THE LAST YEAR

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A month, before tax

LAST YEAR IN TODAY’S RAND

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After inflation

CAPITAL AT THE END

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After the last year

Worked example

These are the calculator's starting values, so the results above match this example until you change an input.

Grace retires with R 3 000 000 in a living annuity and chooses a 5% drawdown. Her first year’s income is R 150 000, or R 12 500 a month before tax.

If her investments grow 9% a year after fees, her income rises each year, to R 24 252,80 a month in year 20. With 5% inflation that is worth about R 9 597,66 a month in today’s money, because her 5% drawdown is more than the real return of about 4%.

Her capital after 20 years would be R 6 027 307,09.

How a living annuity pays you

A living annuity is an investment you buy with retirement savings. You choose a drawdown rate between 2,5% and 17,5% of the value each year, and you can change it once a year on the anniversary. The income is the rate times the value, so it rises when investments do well and falls when they don’t. Unlike a guaranteed (life) annuity, the money is not guaranteed to last for life.

This calculator applies your rate to the value at the start of each year, takes the income out and grows the rest at your expected return. Real investments go up and down from year to year, so treat the result as a guide, not a forecast.

Choosing a drawdown rate

The higher the rate, the more you get now and the faster the capital can run down. If your rate is higher than your return after inflation, your income is likely to buy less each year. Many planners suggest starting at about 4% to 5% if the money has to last 25 years or more, but your health, other income and the investments chosen all matter. A small living annuity, worth R 150 000 or less from 1 March 2026, can be taken as cash.

Sources and review note

Drawdown range of 2,5% to 17,5% a year, changed once a year on the anniversary, under the Income Tax Act definition of a living annuity (M&G summary). Living annuity commutation threshold of R 150 000 from 1 March 2026 (Sanlam). Checked 18 October 2026. An illustration with steady returns, not financial advice.