Question:
When I cashed in my pension fund I received R500 000 which I then put into a preservation fund in 2012. I am a 48 year old female and plan to retire at age 60. How much will I get out as lump sum how much will I receive monthly when I retire this fund?
Answer:
Edith,
We cannot give you an answer, because we do not know what your asset mix is in the preservation fund, how these asset classes will perform, how your
investment manager will perform and what fees you will pay.
We can however project what your savings would be worth if you invested with 10X Investments (that's us), in our life stage portfolio (which de-risks you over the last ten years to retirement), paying a 1% fee pa. To do this, we use the 10X Retirement Calculator. The calculator projects real (after-inflation) outcomes, to give you an idea what your future money is worth today (what it will buy you in today's money).
According to the calculator, in real terms, your R500 000 would grow to R790 000. You could claim up to one third as a cash lump sum (R263 000). If you have not previously withdrawn form a retirement fund, you would not pay tax on this cash lump sum (the first R315 000 are not taxed). You will have to use two-thirds to purchase an annuity. At current annuity prices, that would buy you an annuity of around R2 200 per month. You would not pay tax on this.
Note that these are indicative projections, not guarantees - future investment returns are always uncertain. As indicated above, the actual numbers will be higher as you will also earn an inflationary return (but then living expenses will also be significantly higher in 12 years). You may pay higher fees in your preservation fund, or have a different asset allocation, so your actual results may differ from our projections.
