AS Brokers insight

Safe Drawdown Rates by Age: 65, 75 and 85 in South Africa

A "safe" drawdown rate is not a single number you set once and forget. It shifts as you age. This guide sets out prudent living annuity benchmarks for 65, 75 and 85, explains why the safe rate rises over time, and shows why the right figure for you still depends on your capital, your other income, and how long your money must last.

If you hold a living annuity, you have to answer one question every year: how much of your capital should you draw as income? Most South African guidance stops at a range — "somewhere between 2.5% and 17.5%, ideally 4% to 5%." That is correct, but it does not help a 72-year-old decide. The same percentage that is reckless at 65 can be perfectly sensible at 85, and understanding why is the difference between income that lasts and income that quietly runs out.

This article gives you age-anchored benchmarks and then does the harder, more honest part — explaining why the benchmark is a starting point, not your answer. For the underlying principles, it is worth first understanding what a safe drawdown rate means in the South African context.

What "drawdown rate" actually means

The 2.5%–17.5% rule and the annual reset

A living annuity does not pay a guaranteed income. Instead, you choose how much to withdraw each year — and South African rules require that figure to sit between 2.5% and 17.5% of your fund value. You can adjust it once a year, on the policy's anniversary date. That single decision, repeated annually, determines whether your capital keeps working or steadily depletes.

Why this is the most important retirement decision you make

Set the rate too low and you live more frugally than you need to. Set it too high and you erode capital faster than markets can replace it — and once inflation catches up, your income stalls and then falls in real terms. The guiding principle, as ASISA repeatedly stresses, is that the percentage you draw should not exceed the real (after-inflation) return of the portfolio behind your annuity. Draw more than your capital earns, and you are spending the engine, not just the output.

Why the safe rate changes with age

The logic is simple once you see it. At 65, your money may need to last 30 years or more. At 85, the horizon is shorter — so a higher percentage can still be sustainable, because the income has to stretch over fewer years.

Two forces pull against each other throughout retirement: longevity (you may live far longer than you expect) and income need (you want a comfortable life today). A safe rate balances both. This is also why imported rules of thumb, like the 4% rule, need careful local translation rather than blind application.

What the guidelines say

ASISA considers drawdown rates of 4% to 5% in the first decade of retirement, and below 8% in the later years, generally prudent for preserving purchasing power over a lifetime. The FSCA's draft conduct standard for default living annuities goes further and proposes recommended rates by age — broadly around 5% at 65, rising toward 7% by 85 — designed to give roughly a 90% probability of a sustainable income for life.

These are benchmarks, not promises. Market values can rise or fall, and the right figure for any individual depends on their own circumstances.

Safe drawdown rate at age 65

The benchmark: around 5%

For a healthy 65-year-old starting retirement, roughly 5% is widely treated as a prudent benchmark — consistent with both the FSCA's draft age bands and ASISA's "4% to 5% in the first decade" principle. The reasoning is that at 65 your capital must potentially fund three decades of income while keeping pace with inflation. A modest starting rate leaves room for growth to compound and for your income to rise over time.

Why the early years matter most

There is a specific risk that makes the first few years of retirement disproportionately important: sequence-of-returns risk. If markets fall early in retirement while you are drawing a high income, you are selling units at depressed prices to fund withdrawals — and that damage is very hard to recover from, even if markets rebound later. A high early draw during a weak market can be effectively unrecoverable. Starting conservatively at 65 is the cheapest insurance you have against this.

The common mistake

Many newly-retired clients want to draw more "because I'm still active and want to enjoy it now." The instinct is understandable, but a high rate at 65 borrows directly from the income you will need at 80. The active years are real — they simply have to be funded from a plan that survives the quiet years too.

Safe drawdown rate at age 75

The benchmark: around 6%

By 75, a benchmark in the region of 6% is often reasonable — sitting between the FSCA's age-65 and age-85 reference points and comfortably below ASISA's 8% later-life guideline. The shorter remaining horizon allows a slightly higher rate than at 65, but the discipline of staying below your portfolio's real return still applies.

A check-in: on track, or already drawing too much?

Seventy-five is a natural point to take stock. If you set a rate at 65 and have simply increased it by inflation each year without review, it is worth confirming where you actually stand. The danger is quiet: a rate that was fine at 65 can drift uncomfortably high after a decade of inflation-linked increases, especially if markets underdelivered along the way.

How inflation has reshaped your real income

Ten years of rising prices changes what your rand actually buys. Your personal inflation rate — driven heavily by medical costs in later life — often runs ahead of headline CPI. Two retirees drawing the same percentage can be in very different positions depending on whether their income has genuinely kept pace with their real cost of living.

Safe drawdown rate at age 85

Why a higher rate can be appropriate

At 85, a rate toward 7% — under the FSCA's draft age bands, and kept below ASISA's 8% later-life guardrail — can be sustainable, precisely because the income needs to last fewer years. This is not recklessness; it is the horizon logic working in your favour at last.

The trap of reading the "85 number" at 65

Here is the single most damaging misreading of age-based tables. A retiree sees that 7% is acceptable at 85 and concludes 7% must be fine at 65. It is not. The higher later-life rate exists because the remaining horizon is short. Borrow it at 65 and you risk exhausting your capital decades early. Read age tables forwards, never backwards.

When the question changes

By the mid-eighties, the goal quietly shifts from "how do I grow this?" to "is the income enough, and is it secure?" Capital preservation for a 30-year horizon stops being the priority. Income certainty — and what happens to the residual capital for your beneficiaries — moves to the centre.

"The percentage is only half the problem. Five percent of too little is still too little."

The benchmark is a starting point, not your answer

Age gives you a sensible opening figure. Four factors then decide whether it is right for you specifically.

Capital size

A "safe" percentage of a small capital base can still produce an income you cannot live on. The percentage may be prudent while the rand amount is inadequate — and that is a different problem, one a higher drawdown cannot solve without simply accelerating depletion. Recognising this early matters more than any table.

Other income

A spouse's pension, a guaranteed life annuity, rental income or a business changes everything. If essentials are already covered elsewhere, your living annuity can afford to be more conservative — or can carry a different role entirely.

Health, life expectancy and single vs joint life

A benchmark built around one person cannot account for a spouse who may rely on the same capital for years after you. Joint-life situations, and your own health and family longevity, all legitimately move the safe number.

How your money is invested

A sustainable rate should stay below your portfolio's expected real return. A more defensive portfolio supports a lower safe rate; a growth-oriented one may support more, but with greater short-term volatility and more sequence risk. The drawdown rate and the asset allocation are two halves of the same decision.

How to tell if you're drawing too much

The warning signs are not always obvious from a single statement, which is why duration matters as much as rate. It is worth understanding how long your living annuity will last at your current rate before assuming it is comfortable.

Warning signs

You are drawing above roughly 7.5%. ASISA's guidance shows this generally leaves under 10 years before you reach the 17.5% ceiling — the so-called point of ruin, where you can no longer increase your income and inflation erodes it.
Your annual inflation increase keeps pushing your rate higher, with no review to check it against your real returns.
Your drawdown percentage now exceeds the real return of your portfolio — meaning capital is eroding rather than holding.

The annual review every retiree should do

The single most useful habit is to review your drawdown on every policy anniversary — checking the level you are drawing against current guidelines and your portfolio's performance, before locking in next year's figure. ASISA's own data shows the discipline is spreading: the industry-average drawdown fell to 5.6% in 2024, the lowest since 2011, across more than 554,000 living annuities holding over R781 billion. The average is reassuring, but it is still only an average — it cannot tell you whether your rate is right.

What to do if your rate is already too high

The practical levers

If you are in the danger zone, there is no single silver bullet — but there are levers. Reducing your draw at the next anniversary is the most direct. Reviewing fees and asset allocation can lift your real return. And for some retirees, restructuring part of the capital into a guaranteed life annuity, or a blended (hybrid) annuity, secures essential income while leaving the rest invested. Each option carries its own trade-offs around flexibility, increases and legacy.

Why a review beats a table

A table gives you a number. It cannot weigh your capital, your spouse, your health, your other income and your investments together — which is exactly what determines whether a rate is genuinely safe for you. That combination of benchmark and judgement is the part generic content cannot provide. If your situation is anywhere near the edges of these benchmarks, speak to an AS Brokers adviser before making changes.

Key takeaways

The safe drawdown rate rises with age — roughly 5% at 65, around 6% at 75, toward 7% at 85.
The higher later-life rate is allowed because the horizon is shorter. Never apply the "85 rate" at 65.
The early years carry the most risk: sequence-of-returns risk makes a high draw at 65 hard to recover from.
Above roughly 7.5%, you risk the point of ruin within a decade.
The percentage is only half the answer — capital size, other income, health and investments decide the rest.
Review your rate on every policy anniversary, and seek a professional review before major changes.

Frequently asked questions

What is a safe drawdown rate at age 65?

Around 5% is widely considered prudent at 65, in line with FSCA draft guidance and ASISA's "4% to 5% in the first decade" principle — but the right figure depends on your capital and other income.

What is a safe drawdown rate at 75?

A benchmark in the region of 6% is often reasonable, reflecting a shorter remaining horizon — though still kept below 8%.

What is a safe drawdown rate at 85?

A rate toward 7% can be sustainable at 85, precisely because the income needs to last fewer years.

Why does the safe rate increase with age?

A shorter expected remaining lifespan means your capital has to stretch over fewer years, so a higher percentage can still be sustainable.

Can I just use the 85 figure now to draw more?

No. The higher later-life rate assumes a short horizon. Using it at 65 risks exhausting your capital decades early.

What is the maximum I'm allowed to draw?

South African living annuity rules cap drawdown at 17.5% of fund value per year, with a minimum of 2.5%, reset on your policy anniversary.

What happens if I draw too much?

Capital erodes faster than it grows. Income eventually stalls and then falls in real terms as inflation bites — the point of ruin.

Is 5% safe for everyone at 65?

As a percentage it is reasonable, but if your capital is small, even 5% may not cover essential costs — a separate problem to solve.

How often can I change my drawdown rate?

Once a year, on the anniversary date of the policy.

Does my drawdown rate depend on how my money is invested?

Yes. A sustainable rate should stay below your portfolio's expected real (after-inflation) return. A more defensive portfolio supports a lower safe rate.

About AS Brokers

AS Brokers helps South African retirees, business owners and families make better long-term financial decisions through retirement planning, investments, risk management, estate planning and business assurance. Our focus is on decisions, not products — because principles endure while products change.

This article is educational content and does not constitute personalised financial advice. Drawdown benchmarks are general guidelines, not recommendations for your circumstances, and market values can rise or fall. Figures referenced reflect ASISA and FSCA guidance current at the time of writing and should be confirmed against the latest sources. Speak to an AS Brokers adviser before making any changes to your living annuity. AS Brokers CC, FSP 17273.