By incorporating this type of annuity into your retirement income strategy, you can enhance your financial security, maintain your desired standard of living, and better navigate the challenges and uncertainties that may arise during your retirement years.
4. A life annuity gives you the option to add beneficiaries
Uncertainty surrounding the financial protection of loved ones during retirement can lead to prolonged and unnecessary stress. Fortunately, most life annuity products offer the option to add beneficiaries or set up a joint or spouse’s annuity.
Adding a beneficiary to your life annuity can provide the financial security and peace of mind you need for your loved ones after passing away. By adding beneficiaries to your life annuity, you can ensure an efficient transfer of income in the event of early death.
Additionally, a joint or spousal annuity can offer protection against premature passing. If you pass away, your surviving spouse will continue to receive an income.
This ensures that the surviving individual can maintain their financial well-being and cover expenses without interruption. Their income can either remain the same or be adjusted to reflect reduced expenses, as the overall financial obligations may decrease after the passing of one individual.
5. Use an investment portfolio to increase your income over the long-term
There is a type of life annuity that offers the unique advantage of utilising an investment portfolio to increase your income over the long-term – these are generally referred to as with-profit life annuities.
A with-profit annuity provides a guaranteed income for life with variable increases dependent on the performance of an underlying investment. By linking the performance of your investment portfolio to your annuity income, your with-profit annuity will have the potential to deliver higher income increases compared to traditional fixed options.
It is important to note that actual increases may vary from year to year and may not always align precisely with inflation rates.
However, over the long term, these annuities have demonstrated the ability to outperform inflation – offering enhanced income potential and protection during retirement.
Diversify and enhance your retirement income
One notable benefit of a with-profit life annuity is the diversification of income sources it provides.
By linking an investment portfolio to your life annuity’s annual increases, you are not solely reliant on fixed increases – you can benefit from positive investment performance, which can help secure greater future increases.
Additionally, these annuities offer a level of protection against market downturns. Even if investment markets perform poorly your income will not decrease, since they are structured as life annuities with guaranteed payments.
Overall, using an investment portfolio to increase your income through a life annuity offers several advantages.
Just SA offers a with-profit annuity in two forms: a standalone life annuity and as an income portfolio in a blended living annuity.