Retirement income planning calls for balanced, blended solutions


According to Sherwin Govender, Business Development Manager at Glacier by Sanlam, selecting a retirement income solution requires careful consideration, and in many instances a blended solution can provide a more sustainable outcome.  

A bleak picture

Very few South Africans can retire in comfort and enjoy a lifestyle similar to the one they had before retirement. 

Statistics show that the majority of those who are retiring or are close to retirement are likely to have insufficient retirement savings and much higher income needs. It also highlights the fact that clients’ expectations are very different from their actual planning.

The risks in retirement 

There are a number of risks that warrant serious consideration when designing a post-retirement income solution:

  1. Sequence risk: the risk of retiring at a time when the markets are performing badly. 
  2. Long life (longevity) risk: the risk of living longer than expected and therefore running out of money during your lifetime.
  3. Dependant risk: the risk of your dependants not having resources upon your death.
  4. Liquidity risk: the risk of not having enough available capital to meet monthly expenses.


  1. Investment risk: the risk of poor returns after retirement that reduce your ability to withdraw income to meet your needs.
  2. Inflation risk: the risk of a decline in purchasing power and not being able to meet monthly expenses.
  3. Operational risk: the risk that the company that you are contracted with for your retirement income defaults because of economic conditions.

The current market environment shows that sequence risk, longevity risk, dependant risk, investment risk and operational risk are much more prevalent than in the past. 

The traditional planning solution is to use 100% of retirement capital in a living annuity. Living annuities have historically allowed clients income flexibility, comprehensive investment options and the chance to leave a legacy.

However, these benefits are reliant on strong investment returns, which have not been the case in the past five years. Using a traditional guaranteed life annuity can reduce sequence risk, market risk and longevity risk, but the structure doesn’t always fare well in good investment market conditions. 

At Glacier, you can now combine a living annuity and a life annuity in an integrated solution: Glacier’s Personal Retirement Income Solution. While a life annuity offers a guaranteed income for as long as a client and his/her spouse are alive, a living annuity gives clients the flexibility to select their income level and the underlying investment funds in which their retirement capital will be invested. It also offers the possibility of leaving a legacy. In conclusion combining these solutions could provide greater stability and certainty, but also growth and provision for loved ones after your death – giving you the best of both worlds.

Glacier Financial Solutions (Pty) Ltd and Sanlam Life Insurance Ltd are licensed financial services providers.

The Glacier Personal Retirement Income Solution is underwritten by Sanlam Life.


Retirement income planning calls for balanced, blended solutions
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