A flexible way to ensure your retirement income lasts for the rest of your life
Living annuities remain a popular option for investors at the point of retirement. However, with the income flexibility and the potential for market growth that living annuities bring, comes the responsibility of managing the inherent risks investors face.
Firstly, there’s investment risk. The low-return environment we’ve seen over the last few years, coupled with the market crash following the COVID-19 pandemic, more than likely mean you’ve seen a considerable drop in the capital value in your living annuity. Drawing a higher income could potentially lead to you depleting your capital and drawing a lower income may mean that you’re not able to meet your monthly needs. As a result, the second risk all living annuitants face is the very real possibility of outliving their capital.
Improve the sustainability of your annuity income stream
Investors may be considering if they should take advantage of the current COVID-19 Living Annuity relief to increase the income from their living annuity. While this can bring short-term relief, an increased income drawdown will affect the long-term sustainability of your living annuity income.
Alternatively consider redeploying your living annuity capital to balance your investment and longevity risks by securing the certainty and flexibility of the FlexiGuarantee Life Annuity.
How the FlexiGuarantee Life Annuity can work for you
It’s one solution with many advantages:
You will receive a guaranteed minimum income every month from the life annuity component for as long as you live, and you can choose to have this part of your income grow annually at a fixed rate.
You have the flexibility to adapt your cash flow to meet your changing needs by adjusting the income from the living annuity component once a year.
You have exposure to financial markets, and therefore the opportunity to benefit from market-related growth on your living annuity component. You can access a wide range of unit trust funds, which should be managed in accordance with your investment objectives and tolerance for risk
There are also ways to ensure that the income from the life annuity component continues to be paid to a loved one after your death, such as adding a second life or guaranteed payment term. The capital remaining in the living annuity component can be left to loved ones too.