Van Niekerk, AndriesMoutzouris, VasiliMare, Eben2024-11-182024-11-182024-09-17Van Niekerk, A.J., Moutzouris, V. & Maré, E., 2024, ‘Hybrid retirement strategy in South Africa’, South African Journal of Economic and Management Sciences 27(1), a5681. https://DOI.org/10.4102/sajems.v27i1.5681.1015-8812 (print)2222-3436 (online)10.4102/sajems.v27i1.5681http://hdl.handle.net/2263/99139DATA AVAILABILITY : Data are available from the corresponding author, A.J.v.N., under reasonable request.BACKGROUND : Many retirees in South Africa face the challenge of either outliving their retirement savings or living below their means. Studies suggest a ‘safe’ withdrawal rate of between 4% and 5%, which is below the average fund size-weighted drawdown rate of approximately 6.66%. AIM : To provide a scientific basis for the success rate of a ‘hybrid’ retirement strategy, whereby a retiree invests a proportion of their savings in a life annuity and the remaining proportion in a living annuity, to increase the success rate for South African retirees. SETTING : Historical asset class returns (equities, bonds and inflation) for South Africa were sourced for the period 1900–2020. METHOD : Bootstrap sampling of historical asset returns was employed to simulate 10 000 random scenarios to investigate the success rate of various compositions of the ‘hybrid’ retirement strategy. RESULTS : The success rate of all ‘hybrid’ portfolio compositions is significantly greater than the success rate of a pure living annuity when the withdrawal rate is less than 8%. CONCLUSION : In a South African context, a ‘hybrid’ retirement portfolio increases the probability of success for retirees withdrawing less than 8% from their portfolio – which constitutes approximately 50% of the current annuatised population – and may increase the inheritance of a retiree’s heir. CONTRIBUTION : Where other studies have focussed solely on the success rate of a living annuity, we have shown that a ‘hybrid’ retirement strategy increases a South African retiree’s likelihood of retiring successfully when the withdrawal rate is less than 8%, which is approximately 50% of the annuatised population.en© 2024. The Authors. Licensee: AOSIS. This work is licensed under the Creative Commons Attribution License.RetirementLiving annuityLife annuityBootstrap simulationPortfolio managementSDG-01: No povertyArticle