In our previous posts we discussed both a living annuity and a guaranteed annuity in detail. Remember that at retirement, you need to purchase an annuity. So, it’s important for you to understand the differences between the two. To give you all the information possible, this post is going to focus on the pros and cons of each (living vs guaranteed) and do some comparisons.

We always recommend that you ask to see both options at retirement. For a living annuity – what would my income be with a safe drawdown percentage (remember, we spoke about that being somewhere between 4 and 5%)? If that drawdown percentage is too high, you’re going to run out of money.

With a guaranteed annuity – what would my starting income be? And what increases might I expect? Remember, you’re guaranteed income for the rest of your life, but the cost of goods also goes up (don’t underestimate inflation). So, you want to ensure that your guaranteed income will also increase in a similar manner to cover you for the rising cost of goods.

In this video we take a 65 year old male and consider his options. Take a look:

Generally, the biggest difference between a living and guaranteed annuity is: Flexibility & Certainty

Now, here’s something to consider… You don’t necessarily have to choose one or the other. You can do a combination of the two… check out our next post…

If you haven’t done so yet, subscribe to our YouTube channel.

• Preparing for retirement – This is the first post in a short video series covering everything you need to know to start preparing for retirement!

• How much cash do I take? – The first question you’ll ask at retirement is “how much cash do I take”? Let’s help you answer that with this 4 minute video.

• Living annuities – With living annuities, the most important thing is that you understand the implications of how much you’re withdrawing each year.

• Guaranteed annuities – Guaranteed annuities are essentially an insurance product. They guarantee you an income for the rest of your life!

• Different types of guaranteed annuities – Different types of guaranteed annuities give you different increases each year. Compare that to your starting income.

• The blended annuity – A blended annuity is a combination of a living annuity and a guaranteed annuity. The idea is to determine what your essential expenses are.

• Your retirement options – Let’s recap some of the key points to ensure you understand all your retirement options and make the best decisions with your money.