One of the most common questions we get is: “Can I retire with R5 million in South Africa?”
The short answer? It depends.
A better question might be: “What kind of income can I realistically generate from R5 million … and will that support the lifestyle I want in retirement?”
We often find that people underestimate just how much capital is needed to retire comfortably today. Costs have risen, people are living longer, and investment returns fluctuate. And while we’ve never met anyone who complained about having too much money in retirement, we’ve seen plenty who wished they’d saved a little more.
So in this updated October 2025 version, we break down what you can expect from R5 million, R10 million, and R20 million, based on the latest life annuity and living annuity income levels at ages 55, 60, and 65.
Because annuity rates have adjusted as long-term bond yields have softened, the numbers look quite different from six months ago. But they still provide a clear and realistic benchmark for what your capital can deliver — and a useful starting point for planning the retirement you want.
Before we get into the numbers, it’s worth revisiting the two main ways retirees in South Africa can draw an income from their retirement savings:
Each approach has its strengths and trade-offs, and in practice, many retirees choose to blend the two … using a life annuity to secure essential expenses and a living annuity for flexibility and growth.
For this comparison, we’ve kept things simple: the figures below show only the income generated from retirement fund capital — excluding any discretionary investments, rental income, or other sources.
o give you a realistic sense of what retirement income looks like today, we compared three capital levels … R5 million, R10 million, and R20 million … across three retirement ages: 55, 60, and 65. For each scenario, we looked at income from a life annuity (male and female) and a living annuity using a sustainable drawdown rate.
For the life annuity calculations, we assumed a single-life annuity with a 5% annual escalation and a 10-year guaranteed term. In practice, annuities can be tailored – for example, adding a joint-life option, adjusting the escalation rate, or changing the guarantee period – and each variation affects the starting income. Because women tend to live longer, their initial incomes are typically slightly lower than men’s.
Annuity rates are not static; they change frequently with shifts in long-term bond yields. The figures below reflect current levels (7 October 2025) based on Sanlam life annuity quotes, but rates differ across providers … so it’s worth comparing options. These figures also apply PAYE tax and assume no other income sources, so they don’t represent the most tax-efficient drawdown structure possible.
For the living annuity examples, we used drawdown rates of 4% at age 55, 5% at age 60, and 5.5% at age 65 — roughly in line with what’s considered sustainable over a long retirement. (If longevity is a key concern, slightly lower starting drawdowns may be more prudent.) We kept these rates the same for men and women to simplify the comparison, although in practice, women might need to draw slightly less to ensure their capital lasts.
Now Read: Everything you need to know about living annuities in South Africa and how they work
At age 55, an early retiree investing R5 million into a life annuity today would receive an estimated net monthly income of around R22,403 (male) or R20,712 (female).
That’s based on current starting yields of roughly 6.3% for men and 5.7% for women … notably lower than six months ago, when equivalent yields were about 7.4% and 6.9% respectively. The decline reflects the easing in long-term bond yields, which directly influence annuity pricing.
By comparison, a living annuity at the same age, drawing a sustainable 4% per year, delivers about R15,100 per month. This option offers far more flexibility, but income is market-linked and not guaranteed – leaving you exposed to both investment volatility and longevity risk.
As the capital amount increases (R10 million or R20 million), the tax effect becomes more pronounced, widening the gap between gross and net income. It’s a reminder that effective retirement income planning isn’t only about yield, but also about tax structuring — especially when retirees hold both retirement and discretionary investments. Balancing income sources across tax brackets, using exemptions, and timing withdrawals can materially improve after-tax outcomes.
For early retirees, the key trade-off remains the same:
✅ Life annuity – higher starting income and certainty, but less flexibility.
✅ Living annuity – flexibility and growth potential, but with market and longevity risk
At age 60, a retiree investing R5 million into a life annuity can now expect a net monthly income of around R24,179 (male) or R22,325 (female).
These payouts reflect current starting yields of roughly 6.9% for men and 6.3% for women, down from about 7.9% and 7.3% earlier this year when bond yields were higher. The softening in long-term rates has reduced guaranteed income levels across the board.
By comparison, a living annuity with a 5% drawdown produces about R19,270 per month from the same R5 million portfolio. While that income can grow if investments perform well, it remains market-dependent and not guaranteed — so discipline around drawdown levels and portfolio management becomes essential.
As capital rises, the impact of tax again becomes more visible: for example, a R20 million life annuity yields roughly R77,300 net (male) versus R71,400 net (female), compared with R58,976 from a living annuity at a 5% drawdown. The gap between gross and net highlights how PAYE taxation increasingly erodes income at higher levels. Structuring withdrawals strategically — using tax brackets, exemptions, and discretionary assets — remains one of the most effective ways to optimise retirement income.
At this stage of life, most retirees start balancing certainty versus flexibility. A life annuity can provide stability and remove longevity risk, while a living annuity keeps capital accessible and allows participation in market growth. For many, the optimal solution lies in combining the two, anchoring essential expenses in a guaranteed income and leaving discretionary spending to investment-linked assets.
At age 65, a retiree investing R5 million in a life annuity can expect a net monthly income of about R29,400 (male) or R27,800 (female). These correspond to current starting yields of roughly 7.4% for men and 6.8% for women, down from about 8.4% and 7.8% six months ago.
By comparison, a living annuity drawing 5.5% per year produces around R21,350 per month from the same capital. That remains a reasonable and generally sustainable drawdown at this stage of retirement, offering flexibility and growth potential – but, of course, no income guarantee.
At higher capital levels, the tax burden becomes increasingly significant. For instance, at R20 million, a male life annuitant receives roughly R83,600 net, versus R63,900 net from a living annuity at the same drawdown. This widening gap between gross and net reinforces the importance of strategic tax planning … balancing retirement and discretionary income sources to maximise after-tax efficiency.
At this stage of life, priorities often shift from accumulation to income security, capital preservation, and estate planning. A life annuity provides guaranteed income and removes longevity risk, while a living annuity keeps capital liquid and potentially allows for legacy growth. For many retirees, the optimal approach is to blend the two – securing essential income through guarantees while retaining flexibility for discretionary goals and legacy needs.
To generate a net income of around R50,000 per month from a living annuity, you’d need roughly R20 million in capital, assuming a 4% sustainable drawdown and after accounting for income tax.
If your goal is R100,000 per month (net), you’d be looking at closer to R45 million in retirement capital. That’s because you’d need a gross income of around R150,000 per month to achieve R100,000 after tax — and at a 4% drawdown rate, that translates into roughly R45 million.
These numbers underline just how much capital is required to sustain higher living standards in retirement — and why setting realistic expectations is so critical. They also help explain why life annuities have regained appeal: they provide higher starting incomes and guaranteed longevity protection, especially in today’s rate environment.
More retirees are now choosing to blend life and living annuities — using a life annuity to secure essential income needs while keeping part of their portfolio flexible and growth-oriented through a living annuity.
Now Read: Most people underestimate how much is enough to retire on in South Africa today
It’s a question that comes up often … and the truth is, it depends entirely on your income needs and expectations. R5 million can provide a certain level of financial independence, but whether it’s enough to retire comfortably depends on how much income you require to sustain your lifestyle.
Based on current annuity and drawdown rates, R5 million generates roughly R20,000 to R25,000 net per month for someone retiring around age 60. That might be enough to cover the essentials, but it doesn’t leave much room for travel, rising healthcare costs, or inflation over time.
At a R10 million portfolio, the monthly income roughly doubles, but so too do the costs and responsibilities that come with maintaining a comfortable retirement. For most people, the gap between lifestyle expectations and what their capital can sustainably deliver is wider than they realise — and closing that gap requires careful planning.
How much you’ll need ultimately depends on:
1. Lifestyle choices — how you want to spend your time and what you value most.
2. Healthcare — a major expense that typically rises with age.
3. Inflation — which erodes purchasing power over time.
4. Longevity — the real risk isn’t dying too soon; it’s living longer than your money lasts.
That’s why performing a detailed cashflow and income analysis is so valuable. It helps you see, clearly and personally, what level of income your savings can support — and what adjustments may be needed to achieve the lifestyle you want.
In practice, we see all kinds of scenarios: clients with R30 million portfolios who remain cautious and anxious, and others with R10 million who live comfortably and contentedly. The difference isn’t just the amount of money — it’s the clarity, planning, and discipline behind it.
Further Reading: Biggest Retirement Planning Mistakes You Should Avoid
The retirement industry often talks about something called a “replacement ratio” — the percentage of your pre-retirement income you’ll need to maintain your lifestyle once you stop working. The benchmark is usually around 75%, often presented as the “magic number” for a comfortable retirement.
In practice, though, this idea can be quite misleading. Here’s why:
1. Everyone’s different: Spending patterns vary widely. What feels comfortable for one person may feel restrictive for another — it all depends on your cashflow, lifestyle, and priorities in retirement.
2. Needs change over time: Early retirement years often involve more travel, leisure, and active living. Later years tend to shift towards higher healthcare and support costs.
3. Other income sources: Replacement ratios typically ignore non-salary income, such as rental income, part-time consulting, dividends, or other sources of capital, all of which can make a big difference.
In reality, some people live comfortably on 50% of their pre-retirement income, while others need closer to 90% to maintain their lifestyle. Ratios can be a useful benchmark when you’re still working and need a target to aim for, but once you’re close to retirement, the focus should shift to your actual cashflow needs and the life you want to live.
A well-structured retirement plan isn’t built on a percentage — it’s built around you, your values, and your spending reality.
Consider Reading: Some of the best performing balanced funds retirees can consider as part of their investment strategy
A life annuity today can deliver about R30,000 per month for life for a 65-year-old male investing R5 million. To safely match that through a living annuity, you’d need close to double the capital. At a 5.5% drawdown, a living annuity produces around R21,000 per month, but risks depleting within 20 years if returns or inflation disappoint.
Put simply, you’d need roughly R11 million to generate R30,000 p.m., R20 million for R50,000, and R45 million+ for R100,000 (net income) at a sustainable 4% drawdown. Those numbers highlight how important it is to plan with realistic assumptions and conservative expectations.
The takeaway? Life annuity rates remain appealing, making blended strategies increasingly attractive — using a life annuity for core income certainty and a living annuity for flexibility and growth. It’s not about choosing one or the other, but about striking the right balance for your needs.
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Carl-Peter is a Director and Partner at Henceforward, with over 20 years of experience in wealth management and financial planning. As a CERTIFIED FINANCIAL PLANNER®, he specialises in helping retirees navigate the complex decisions around retirement income, investment strategy, and financial security - bringing clarity and confidence to the next chapter of their lives.
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