In this guide
Like most people today, retirees and those nearing retirement are increasingly worried about the rising cost of living and whether they have enough super and other investments to last the distance.
Not only are we are living longer on average than previous generations, but none of us knows exactly how long we will live. This makes it difficult to work out how much super and other savings will be enough and how much we can safely afford to spend throughout our retirement years.
To provide a higher degree of certainty and peace of mind in retirement, an annuity product could be worth considering. Used in conjunction with income from super, other investments and potentially the Age Pension, an annuity may also give you the confidence to spend more in your early retirement years while you are still active.
Learn about starting a super pension.
What are annuities?
In simple terms, an annuity provides regular income payments during your retirement in return for a lump sum from your super or other savings.
Depending on the type of annuity you purchase, they can be used to provide guaranteed payments for either a fixed term of your choice or for the rest of your life.
With investment market volatility once again an issue, one of the key benefits of annuities is that they provide guaranteed income, regardless of how investment markets are performing.
Good to know
Annuities – and the new lifetime pensions being offered by some super funds – are often referred to as longevity products or lifetime income products, as they help reduce the risk of outliving your super and other investments.
Annuities offer different options when it comes to their investments, the income guarantees they provide and whether your income payments can revert to your spouse if you die before them.
These products are different to the account-based pensions offered by super funds (see section below).
Learn more about longevity products.
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