Two-Pot Retirement Withdrawal Calculator South Africa: Plan Your Retirement Income

Managing your retirement savings in South Africa is crucial to ensure a comfortable lifestyle after retirement. The Two-Pot Retirement System divides your retirement savings into two “pots”: one for lump sum withdrawals and one for retirement annuity income.

Our Two-Pot Retirement Withdrawal Calculator helps you plan how much you can withdraw while maintaining a steady income for your retirement years.

What is the Two-Pot Retirement System?

• Pot 1 – Lump Sum: A portion of your retirement savings can be taken as a lump sum at retirement.

• Pot 2 – Annuity Income: The remainder must be used to buy an annuity, providing regular income during retirement.

• Purpose: Helps retirees balance immediate financial needs with long-term income security.

How the Two-Pot System Works

1. Determine Total Retirement Savings: Sum of all retirement funds and retirement annuities.

2. Allocate Lump Sum Pot: Typically up to one-third of total savings.

3. Allocate Annuity Pot: At least two-thirds used to buy an annuity.

4. Withdraw Wisely: The lump sum can be used for debt repayment, investments, or major expenses.

Practical Example: Two-Pot Retirement Withdrawal

Example:
Nomsa is 60 years old and has R3,000,000 in retirement savings.

• Lump Sum Pot: 1/3 × R3,000,000 = R1,000,000

• Annuity Pot: 2/3 × R3,000,000 = R2,000,000

If she buys an annuity with R2,000,000 and receives a 5% annual return, her monthly annuity income = R8,333.

👉 Our calculator lets Nomsa adjust withdrawal percentages and see how it impacts her retirement income.

Two-Pot Retirement Withdrawal Calculator

Use the calculator below to plan your retirement withdrawals:

Why Use the Two-Pot Calculator?

• Helps plan lump sum and annuity allocations.

• Ensures long-term income security.

• Allows experimentation with withdrawal percentages.

• Provides a clear picture of your retirement finances.

Who Should Use the Calculator?

• Retirees planning withdrawals – to manage lump sum and annuity income.

• Pre-retirees – to forecast retirement income.

• Financial advisors – to help clients plan withdrawals.

• Anyone contributing to retirement funds – to understand how to optimize retirement income.

10 Frequently Asked Questions (FAQs)

1. What is a Two-Pot Retirement System?

A retirement system dividing savings into a lump sum and annuity pot for sustainable retirement income.

2. How much can I withdraw as a lump sum?

Up to one-third of total retirement savings.

3. Is the lump sum taxed?

Yes, taxed according to SARS lump sum withdrawal tables, but the first R550,000 is usually tax-free.

4. How does the annuity pot work?

It is used to buy an annuity that pays a regular monthly income for life.

5. Can I change the pot allocation?

Yes, you can adjust percentages to suit your financial needs.

6. Does investment growth affect withdrawals?

Yes, the annuity income depends on the invested amount and interest/returns.

7. Can I take more than one lump sum?

No, generally only one lump sum is allowed at retirement.

8. Is this system mandatory?

No, but it is recommended for balanced retirement planning.

9. Can I leave annuity income to my beneficiaries?

Yes, some annuity products allow for death benefits.

10. How can I plan withdrawals to last my retirement?

Use the Two-Pot Retirement Withdrawal Calculator to model different scenarios.

Final Thoughts

The Two-Pot Retirement System helps South Africans manage their retirement savings responsibly, balancing immediate needs with long-term income security.

👉 Use our Two-Pot Retirement Withdrawal Calculator today to plan your retirement withdrawals and ensure financial peace of mind.