11 February 2021
The sad truth is that not as many of us are as prepared for retirement as we’d like to be. Add in things out of our control, like market uncertainty and increased healthcare needs, and even more pressure can be placed upon the longevity of the money we’ve saved for our retirement.
A survey conducted by Brand Atlas in 2019 highlighted that:
Sources: Sanlam Benchmark Symposium, 2010; Retirement Reality Report 2019; Brand Atlas, September 2019.
So how do you ensure that the money you’ve worked so hard to save lasts for the length of your retirement?
Living annuities aren’t guaranteed for life. The number of years your living annuity will last depends on the performance of its underlying investments, how much income you draw during your retirement, and how long you live for.
There are therefore some risks associated with living annuities:
Glacier Invest believes that a traditional approach to portfolio construction is not enough to protect you from these risks. To protect yourself from running out of money during your retirement, your investments should be managed with a focus on preserving and growing capital, and reducing the effects of market volatility. So, how do we do this?
An asymmetrical return approach aims to boost, support or protect your retirement capital and income so that you can grow your wealth when markets are flourishing, and protect it when markets are struggling.
We achieve this by using contemporary portfolio-construction tools to ensure an asymmetrical distribution of returns: hedge funds and other alternative assets are used as ‘return boosters’ because they behave unlike the markets and so can protect your investment portfolios from unexpected market shocks (like COVID-19).
In addition, smoothing techniques are used to reduce the effect of market volatility and create more income stability by holding back excess returns in good years and releasing them back to investors in years when markets perform poorly. This way, you have a more stable return experience on a year-by-year basis.
Our specially designed model portfolios, called the Glacier Invest Real Income Solutions, are actively managed to target specific investment returns. They’re available in five different variants, each one suitable for a different type of investor. Your financial adviser will be able to give guidance on which one will be most suitable for you.
Glacier Invest Real Income Solutions are actively managed model portfolios. What are model portfolios?
A model portfolio, or wrap fund, consists of a combination of collective investment schemes (also known as unit trusts), managed to achieve a specific investment goal. The mandate of a model portfolio aligns with a specific investor risk profile – in other words, the amount of risk you’re willing to take on determines which model portfolio you would choose to invest in, with help from your financial adviser.
You can learn more about Glacier Invest’s Real Income Solutions on our website. Speak to your financial adviser about incorporating these into your living annuity, as part of your retirement planning.
Please consult with a financial adviser before you take any action regarding your savings and investments.