Annuities Explained: Are They Right for You?
Annuities provide guaranteed income for life – peace of mind many retirees value. But they aren’t for everyone.
How They Work
You invest a lump sum with a provider in exchange for regular payments, either for a set term or for life.
Pros
- Certainty: income regardless of market performance.
- Simplicity: fixed, predictable payments.
- Protection: reduces risk of outliving savings.
Cons
- Less flexibility: funds are locked away.
- Returns may be lower than growth investments.
- Inflation risk if payments are not indexed.
Who They Suit
- Retirees seeking peace of mind.
- Those with conservative risk profiles.
- People without other guaranteed income.
Final Thought
Annuities aren’t the only solution, but combined with super and the Age Pension, they can create a strong income foundation.
References
- Challenger. Retirement Income Research, 2024.
Disclaimer: This information is of a general nature only and does not constitute advice. It has been provided without taking account of your objectives, financial situation or needs. Because of this, we recommend you consider, with or without the assistance of a financial adviser, whether the information is appropriate in light of your particular needs and circumstances. Hendrie Financial Strategies is a corporate authorised representative of the Madison Financial Group Pty Ltd, Australian Financial Services License No 246679, ABN 36 002 459 001.
