How do you decide between retirement income options in the retail market? Part 3

Now that we’ve drawn a comparison between living annuities and life annuities in Part 1 and Part 2 of this series of articles, we can elaborate on the hybrid annuity option.

When doing this, an advisor would usually try to cover your absolute necessary expenses from the life annuity income, and then cover the rest from the living annuity income. As I’ve mentioned, usually the non-negotiable expenses should be covered by the guaranteed annuity, where the more variable expenses can then be covered by the income from the living annuity.

As I want to highlight again, you will be allowed to convert portions of your living annuity to the guaranteed life annuity at any point in time. This can be helpful to ensure provision for increased expenses later in life. It is however important to note that once you move any amount of capital from a living annuity to a life annuity, you can never switch it back to a living annuity.

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