Living annuity or couples: Coordinating two living annuities to optimise household income

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It’s common for South African couples to retire with separate living annuities, each funded by their own retirement savings from a retirement annuity, preservation fund or similar vehicle. Often, these living annuities are not managed in tandem, which can result in issues such as a suboptimal asset allocation or tax inefficiency.  

In many cases, couples just replicate decisions made before retirement without realising how much more efficient a coordinated approach can be. Coordinating your living annuities as a couple can result in a more streamlined and efficient retirement solution. In this article, we will discuss how to align your living annuities as a couple for a coordinated draw-down rate, tax efficiency, structured legacy planning and optimised asset allocation. 

What is a living annuity? 

A living annuity is a flexible long-term retirement investment product, designed to allow you to draw an income from it while also keeping the capital invested, allowing for further potential growth. Flexibility is a huge part of the appeal, as you can select both your annual drawdown rate and make adjustments to your underlying investment portfolio to suit your financial needs and retirement goals.  

Of course, with flexibility comes responsibility. You’ll have to balance your immediate income needs with the long-term goal of preserving and potentially growing your capital. Choosing an appropriate drawdown rate and reviewing it regularly are key steps to making sure that your savings last throughout retirement.  

Your drawdown rate can be between 2.5% and 17.5% per annum. This can be adjusted annually at your policy anniversary date, the date that you started your living annuity. You are also able to select the frequency of your income payments. These can be annually, bi-annually, quarterly or monthly, depending on your preferences.  

On top of this, a living annuity will also offer legacy benefits. A big part of a living annuity’s appeal is the ability to pass on the remaining capital to your beneficiaries outside of your estate - and therefore tax-free. 

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Two living annuities, one household: Understanding the basics 

During retirement years, couples need to ensure that their financial goals and plans for retirement align. Time should be set aside to work out shared goals, plans and visions, ensuring that both partners are on the same page.  

In practice, coordination goes beyond just deciding on how much to withdraw each year. It’s about establishing clear communication around financial expectations, timelines and responsibilities. Regular financial discussions and joint reviews can help maintain alignment and stop one annuity from carrying too much risk or depleting faster than expected.  

Living annuities should form an important part of this financial planning. Each person will have their own living annuity, and these are completely separate. As such, each investor will be able to choose their own drawdown rate, payment frequency and asset allocation.  

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Household spending is usually combined with living annuity income funding expenses, such as food, housing, transport and similar. Therefore, there needs to be coordination between the two annuities to ensure that they work in tandem. This will ideally mean greater tax efficiency, better potential sustainability of both living annuities and will also allow for a more secure cash flow.  

Practical steps for coordinating your living annuity with your partner 

Coordination requires planning across several areas. The steps below outline how to align your living annuity with your partner’s for optimal income stability and tax efficiency. 

Step 1 — Coordinate drawdown rates  

Each couple may have their own preference as to how they want to structure their drawdown rates from each of their own living annuities. The main consideration here would be to ensure that you coordinate these drawdown rates, and consider both annuities when selecting the drawdown rate for that particular year.   

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You would always want to focus on the sustainability and longevity of your living annuities, as this responsibility will lie with you as the investor. Financial experts consider a sustainable drawdown rate to be around 4%, as anything higher than this may mean that your living annuity runs out too soon. Keep in mind that nothing can be guaranteed, and personal circumstances will vary.  

Step 2 — Optimise household tax efficiency  

Your living annuity income is taxed according to your marginal tax rate. This rate takes into account your total income amount from all sources. For this reason, you should ensure that you structure your drawdown rate while taking these factors into account to ensure that you don’t move up into a higher tax bracket and marginal tax rate. This may mean you need to select a slightly higher drawdown rate from one of the annuities and a lower drawdown rate from another, depending on your respective income levels and ages.   

Tax treatment of annuity income as taken from the SARS website:  Tax thresholds for the 2025 year of assessment (1 March 2024 – 28 February 2025) – No changes from the previous year 

• Under 65 years: R95 750  
• 65 to under 75 years: R148 217. 
• 75 years and older: R165 689. 

You would look to review this annually to ensure they remain aligned with current tax thresholds, income needs and household circumstances.  

Step 3 — Align investment strategies and risk profiles  

Your household operates as a whole unit, so this needs to be considered when structuring the asset allocation of both spouses’ living annuities. This asset allocation should reflect the risk profile, financial goals and timelines of both spouses. The asset allocation you select is usually a mix of the following asset classes: equities, bonds, real estate (property) and cash. Each of these asset classes has different features. As an investor with 10X, you have the freedom to customise your underlying investment portfolio by choosing from a selection of carefully curated investment funds, each with a different asset allocation and geared towards different investor profiles.   

Equities are the most volatile of the asset classes, but they are also likely to generate the best returns over the long term. Equities have historically produced returns above inflation, by around 7% annually, over the long term (based on JSE All Share Index performance versus CPI from 1960-2020) - however, past performance does not guarantee future results.  

 Bonds may add more stability to a portfolio, but are also likely to generate lower returns. Real estate can be a good hedge against inflation, while also generating some good returns. Cash, on the other hand, will be the most stable of the asset classes but will likely generate the lowest returns.   

Diversifying across the asset classes helps to spread your risk while also taking advantage of market gains that may occur in certain asset classes. You may also like to further diversify your portfolio offshore. This will help to mitigate against local market instability as well as any depreciation of the Rand. Living annuities are not subject to Regulation 28, meaning you are able to invest 100% offshore. 10X is able to offer a 100% offshore living annuity, which many service providers are unable to offer due to their own internal limits.  

When deciding on your asset allocation, you should consider both living annuities and structure your asset choices accordingly. This may look different for each couple, but it should be aligned with your particular investor profile's long-term financial goals. Asset allocation plays the biggest role in the performance of your living annuity, accounting for over 90% of returns, as this seminal research from Brinson, Singer, and Beebower shows.  

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You should also revisit and review your asset allocation after any major market movements or life changes. Couples who take the time to reassess together can make more balanced decisions and avoid reacting emotionally to volatility. When you discuss how much short term-volatility you’re willing to deal with before feeling uncomfortable, you can stay committed to your long-term plan, even when markets are unpredictable.     

At 10X, we have a range of well-diversified funds that have been carefully selected in order to suit a variety of different investor profiles. Please visit our funds page here for the most up-to-date fund information.

Step 4 — Plan for longevity and survivor scenarios  

Planning for a situation where one spouse passes away is vital. As mentioned, a living annuity does not form part of your estate, but it will pass directly to your nominated beneficiary. Hence, you should ensure that both living annuities have appointed a beneficiary to avoid any delays.   The surviving spouse will then have some options available to them. They may:  

• Decide to continue to receive annuity payments. The surviving spouse will be taxed at their marginal tax rate.  
• Choose to take a lump sum amount. In this scenario, the first R550 000 will be tax-free, and the remainder will be taxed according to the retirement tax tables. These tax tables have been taken from the SARS website as of the 23rd of October 2025:  

•  Wish to take a portion as a lump sum amount and transfer the remainder to a living annuity in their own name. The first R550 000 is tax-free, and the remainder will be taxed as per the retirement tax tables above. 

Step 5 — Managing fees and administration across two accounts 

There will be fees deducted from each of the living annuities, so it is important to review these fees and ensure that they are cost-effective. High fees mean that there are fewer returns available to compound and grow over the long term. Lower fees may mean that there are more potential returns available to compound, which may result in more growth over time.   

There are some typical fees that you may see charged on your living annuities. These are the following:  

Administration fees: These are the fees that are deducted for all administrative tasks. Tasks such as reporting, tax and compliance would fall under this category.  

Advisor fees: Fees charged by an advisor for the services that they offer and the advice that they give are the advisor fees.  

Management fees: These are the fees charged for the management of the fund.  

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You should also review your Effective Annual Cost (EAC) of your living annuity. This is the total fees and costs of owning an investment over a one-year period of time. You can find your EAC on your investment statement, or it can be requested from your service provider.   

All factors being equal, a higher EAC may mean that there are fewer returns to be reinvested and allowed to potentially grow over time. A lower EAC may mean that there are more returns to be reinvested and allowed to compound over the long term. The EAC would be just one factor to consider when comparing service providers.   

Let’s look at an example which shows fees of 0.86% compared with fees of 3% and the effect of this on your living annuity when compounded over a period of 25 years.  

• Investment amount: R2 million  
• Investment period of 25 years 
• Drawdown rate: 4% (assuming an annual payment) 
• Return of 12% per annum 
• An inflation rate of 6% 

Example 1 (0.86% Fees): Real investment value is approximately R2.36 million. 

Example 2 (3% Fees): Real investment value is approximately R1.45 million.  

We can see how even a small difference in fees can make a major difference. This example is for illustrative purposes only, and actual results may vary. You can learn more about fees here.   

10X offers a low-cost and transparent fee structure, which keeps fees simple for the investor. Fees charged on most products are less than 1%. This does depend on the selected product and the amount invested. Please visit our product pages for the most correct fee information. Fee information is up-to-date as of the 23rd of October 2025.  

Step 6 — Synchronise review and adjustment cycles  

Each year, you should schedule an annual review where you evaluate both living annuities. You would want to consider the following when reviewing:  

• Your combined income requirements. 
• The living annuities drawdown rate and sustainability. 
• The suitability of your asset allocation. 
• Your nominated beneficiaries. 
• Your fees and EAC. If necessary, compare with other service providers. You can do so by making use of this calculator offered by 10X, as a part of our free online suite of tools available to investors.   

Final thoughts on coordinating two living annuities 

In conclusion, as a couple, you would want to coordinate your living annuities to ensure that they provide the most efficient results for your retirement years. Coordinated planning is about more than just numbers, it’s about peace of mind. When couples understand how their annuities interact, it can reduce financial stress and anxiety while supporting confident decision-making.  

By reviewing your annuities as a whole, instead of individually, you can help to ensure that they work in tandem. Focusing on fees, taxes, asset allocation, drawdown rates, and beneficiary nominations will help keep your living annuities on track.  

If you need help structuring your living annuities, get in touch with our knowledgeable 10X investment consultants who will help with any of your queries. Retire your way with a 10X living annuity, offering superior returns, low fees, exceptional service, and up to 100% offshore exposure.