The choices you face at retirement

Investors who are near or already in retirement face the most challenging of investor needs. Not only do they need to invest their life savings in order to draw a regular income from that retirement pot, but they also need for that regular income to be paid out over a multi-decade time horizon. To achieve this, they require both capital preservation in the short term and inflation-beating capital growth in the long term from their investment portfolio. As living (market-linked) annuities are often the most appropriate option from which to draw a retirement income, this edition aims to help investors better understand their living annuity investment (page 5), and how being invested in the appropriate mandate can prevent the next retiree disappointment we believe is in the making (page 9). We also share some practical tips that may guide appropriately prudent retirement planning (page 13).

The choices you face at retirement

Investors who are close to retirement need to make two choices with respect to the retirement savings that they have accumulated over their working lives. Both decisions require careful thought and input from a qualified financial adviser.

Once you’ve decided on the amount that you want to invest, you have two main options from which to draw your retirement income: a living (market-linked) annuity or a guaranteed (life) annuity underwritten by a life insurance company. Both products have their own set of advantages and limitations, as outlined in the following table: