Publications
Partners
A Fin24 user writes:
I am 69, retired, and need approximately R30 000 per month after tax income for the rest of my life. What sort of capital amount invested in a balanced portfolio is required for this?
Andries Cilliers, a financial planning analyst for senior market advice at Sanlam, responds:
You will need ± R4.160m.
For calculation purposes, the following assumptions were made:
1. The investment is 100% discretionary money (ie no retirement/life annuity funds).
2. You have no taxable income other than that emanating from this investment.
3. Asset class spread = 60% shares and 40% in a combination of cash, fixed interest and property funds.
4. Net capital growth on shares = 8.0% p a (after capital gains tax)
5. Dividend yield on shares = 2.50% p a (2.125% p a after dividends withholding tax)
6. Net average interest on cash/fixed interest/property funds = 6.56% p a
7. Net weighted after-tax yield on investment = ± 8.70% p a after cost.
8. Provision term = 14 years (until age 83).
9. Inflation rate = 6% p a at all times.
10. The required income will escalate at 6% p a.
11. Your taxable income (after medical deductions) will always be less than the income threshold for tax payers (currently R99 056 p a for persons between 65 and 75 years and R110 889 for persons older than 75 years).
12. Your capital will be depleted at the end of the provision term.
We urge you to contact a financial adviser, who will do a calculation based on your personal circumstances.
I am 69, retired, and need approximately R30 000 per month after tax income for the rest of my life. What sort of capital amount invested in a balanced portfolio is required for this?
Andries Cilliers, a financial planning analyst for senior market advice at Sanlam, responds:
You will need ± R4.160m.
For calculation purposes, the following assumptions were made:
1. The investment is 100% discretionary money (ie no retirement/life annuity funds).
2. You have no taxable income other than that emanating from this investment.
3. Asset class spread = 60% shares and 40% in a combination of cash, fixed interest and property funds.
4. Net capital growth on shares = 8.0% p a (after capital gains tax)
5. Dividend yield on shares = 2.50% p a (2.125% p a after dividends withholding tax)
6. Net average interest on cash/fixed interest/property funds = 6.56% p a
7. Net weighted after-tax yield on investment = ± 8.70% p a after cost.
8. Provision term = 14 years (until age 83).
9. Inflation rate = 6% p a at all times.
10. The required income will escalate at 6% p a.
11. Your taxable income (after medical deductions) will always be less than the income threshold for tax payers (currently R99 056 p a for persons between 65 and 75 years and R110 889 for persons older than 75 years).
12. Your capital will be depleted at the end of the provision term.
We urge you to contact a financial adviser, who will do a calculation based on your personal circumstances.
