Essential expenses
Primary living costs
Housing, groceries, medical cover, insurance, essential transport and unavoidable family support.
Retirement Monte Carlo PlannerRetirement income choice
Living annuity,
guaranteed annuity
or both?
Build an income floor for essential expenses, then decide how much capital should remain flexible and invested.
01 Define the floor02 Price certainty03 Compare the mix
01
Your retirement picture
Start with the people and the capital.
The default example starts at age 65, a common retirement age. A guaranteed annuity quotation still depends on the age and sex of every life covered, as well as the selected income and guarantee terms.
02
Define the income floor
Which expenses should never depend on a good market year?
Enter essential expenses after tax. Flexible expenses are important, but can potentially be adjusted when markets or circumstances change.
Flexible expenses
Lifestyle and choice
Travel, entertainment, gifts, upgrades and spending that could be reduced temporarily if needed.
Existing dependable income
Income already secured
Enter taxable gross pension or other dependable income. Do not include investment withdrawals that may run out.
03
Price guaranteed income
Start with CPI protection, then replace the assumption with a formal quote.
The default uses a transparent CPI-linked planning assumption. An actual insurer quote remains necessary because starting income depends on the lives covered and all selected guarantees.
Illustrative age-65 CPI-linked starting income per R1 millionR 5 300R 63 600 yearly starting income for a male, increasing with the inflation assumption.
This is an illustrative planning rate, not a current insurer quote.
The age-65 single-life assumption is R5 300 monthly per R1 million for a male and R5 100 for a female. It includes the modelled 10-year guarantee period and excludes capital legacy protection. The selected sex determines the rate used. Replace it with a formal like-for-like CPI-linked quote before making a decision.
Optional capital legacy
Guaranteed income does not always mean leaving nothing behind.
Some South African annuities combine guaranteed lifetime income with life cover payable to beneficiaries. This is different from a guarantee period or joint-life continuation, and it has a cost.
Product terms differ. Some products provide life cover equal to the full purchase amount, while partial-cover availability and pricing may differ. See the official Discovery Secured Capital Annuity and Momentum Capital Protector information, then obtain a formal quote.
04
Choose the mix
Guarantee the floor. Keep the rest flexible.
The recommended allocation solves for enough guaranteed gross income to fund the entered essential expenses after estimated current-year tax.
Suggested guaranteed allocation45,5%R 4 096 698
Selected starting quote rate6,4%R 5 300 per R1m monthly
Projected yearly increase6%Linked to the inflation assumption
Guaranteed annuityR 4 096 69845,5% of capital
Living annuityR 4 903 30254,5% of capital
05
Your modelled result
Essential-expense floor reached
The blended result separates lifetime income for essentials from flexible investment income. It does not suggest that one structure is automatically best.
Essential expenses covered by guaranteed net income100%
R 20 000 estimated guaranteed net income compared with R 20 000 essential expenses.
Blended starting net incomeR 31 788 / month
R 38 057 gross less estimated 2026/2027 income tax.
Cash remaining after all entered expensesR 1 788 / month
The estimated starting net income covers all entered essential and flexible expenses.
Probability the blended 4% living-annuity drawdown lasts to age 10044,2%
Across 5 000 simulated investment paths, this is the percentage in which the living portion pays its inflation-linked drawdown without running out before age 100. Guaranteed income is not subject to this investment-path test.
- Guaranteed capital
- R 0
- Living-annuity capital
- R 9 000 000
- Guaranteed gross income
- R 0 pm
- Living gross income
- R 30 000 pm
- Flexible-spending adjustment needed
- R 3 867 pm
- Probability selected 4% living drawdown lasts to age 100
- 44,2%
Essential expenses are covered. Flexible spending must reduce by R 3 867 per month unless another income source is available.
Maximum flexibility and estate potential, but basic expenses remain exposed to investment and longevity risk.
- Guaranteed capital
- R 9 000 000
- Living-annuity capital
- R 0
- Guaranteed gross income
- R 47 700 pm
- Living gross income
- R 0 pm
- Cash remaining after all entered expenses
- R 8 266 pm
- Probability selected 4% living drawdown lasts to age 100
- Not applicable
The estimated starting net income covers all entered essential and flexible expenses.
Lifetime income certainty, but the capital is generally no longer flexible and estate value depends on product guarantees.
- Guaranteed capital
- R 4 096 698
- Living-annuity capital
- R 4 903 302
- Guaranteed gross income
- R 21 713 pm
- Living gross income
- R 16 344 pm
- Cash remaining after all entered expenses
- R 1 788 pm
- Probability selected 4% living drawdown lasts to age 100
- 44,2%
The estimated starting net income covers all entered essential and flexible expenses.
Guaranteed income targets essentials while the remaining capital supports flexible spending and potential legacy.
06
Income-floor projection
Compare both income sources with the expense targets.
The chart shows guaranteed income, the planned living-annuity drawdown and their combined gross income against both the essential and total-expense gross targets.
Nominal values show the rand amounts expected in each future year after compound inflation. The living-annuity line is the planned drawdown, not guaranteed income. The Monte Carlo percentage in the results tests whether the invested living portion can sustain this inflation-linked path. When the orange dashed essential-expense target overlaps the green guaranteed-income line, the modelled guaranteed income exactly matches the essential target. Future tax rules are unknown, so the expense lines use the current tax table as a starting proxy rather than a future tax forecast.
Probability detail
How to interpret the 44,2% probability
2 211 of 5 000 paths maintained the selected income
This tests the living-annuity portion only. It is not the probability of losing all retirement income, because the guaranteed-annuity income continues for life under the selected terms.
Living capital testedR 4 903 302
Starting living incomeR 16 344 pm
Income increase6% pa
Return and volatility9% and 11%
Planning periodAge 65 to 100
The living-only and blended options can show the same probability when both start at 4% of their own living-annuity capital. Capital and starting income then change in the same proportion. This percentage measures sustainability, not whether the entered expenses are covered.
Explore the return paths, sequence risk and capital outcomes07
How to use the result
Certainty, flexibility and legacy pull in different directions.
A higher guaranteed allocation improves income certainty. A higher living-annuity allocation retains flexibility, investment participation and potential estate value, but carries market, sequence and longevity risk.
Guaranteed lifetime income transfers investment and longevity risk to the insurer, subject to the selected terms.
Compare level, fixed-increase, inflation-linked and with-profit quotations on future purchasing power, not starting income alone.
Joint-life continuation and guarantee periods reduce the risk of income stopping too soon, but normally reduce starting income.
Living-annuity capital can pass to beneficiaries. Some guaranteed annuities can instead add life cover for a capital legacy, but the protection reduces available income or carries a premium.
Important: This calculator is general financial education, not an annuity quotation, product comparison, tax opinion or personal recommendation. The default CPI-linked starting rate is illustrative and must be replaced with a formal quote. Actual CPI-linked increases follow the product's stated CPI measure and timing, not a fixed 6% increase. Masthead rates are dated information for different structures and are retained only for comparison. Insurer quotations can differ by age, sex, spouse terms, guarantee period, escalation, capital legacy protection, purchase amount, market conditions, underwriting and product features. Capital protection is life cover, not retained annuity capital, and benefit availability, premiums, tax treatment and beneficiary rules are product-specific. Both living-annuity and guaranteed-annuity income are generally taxable. The net-income estimate uses current 2026/2027 individual tax brackets and age rebates, excludes medical tax credits and other income, and does not model future tax changes. Personal essential expenses, particularly healthcare, may increase differently from CPI. Obtain formal like-for-like quotations and consider advice from an appropriately authorised financial adviser before making an irreversible annuity decision.