Living annuities: don’t be misled by the starting income
|26 July 2016|
We are often asked by advisers how to compare the income that can be secured through a Just Retirement Enhanced With-Profit Annuity to the income that can be drawn from a living annuity.
It’s a good question, because the starting incomes from both options could be the same. However, how the future incomes compare as the annuitant ages is a very different story. It can be misleading to look at the starting income from a living annuity and make a decision on that alone.
We’ve prepared an example that illustrates how the incomes compare over time, based on the following assumptions:
The tables below show exactly what happens to the income yield and the investment amount over 35 years.
The starting incomes at age 65 are comparable, but:
In a recent survey that we conducted, 86% of retirees stated a clear preference for income security in retirement*. Investing 100% in a living annuity, in which annuitants run the risk of a reduced income and depleted savings, is clearly not a desirable option for the majority, and a Just Retirement Enhanced Annuity could be more appropriate. A Just Retirement Enhanced With-Profit Annuity will give your client a guaranteed income for life, no matter how long they live or what happens to investment markets.
We look forward to quoting for your clients!
*See “What retirees want vs what they are sold” at http://www.justretirement.co.za/News/Press-Releases
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|We believe everyone deserves a just retirement.|