What is the key tradeoff between drawdown and annuity?

Drawdown: investment risk (return could be poor), flexibility, death benefits (pot passes to beneficiaries), can vary income. Annuity: longevity risk managed, guaranteed income regardless of markets, no flexibility, no residual value for beneficiaries.

What is a typical annuity rate for a 65-year-old?

Annuity rates depend on age, health, and prevailing gilt yields. A healthy 65-year-old buying a single life, level annuity with no guarantee period might receive approximately £6,000-7,000 per year per £100,000. Enhanced annuities for poor health can be significantly higher.

What is a blended approach?

Many retirees use both: purchase an annuity to cover essential expenses (guaranteed floor income alongside state pension), and keep the remaining pot in drawdown for flexible, discretionary spending and growth potential.

Pension Drawdown vs Annuity Comparison Calculator

Compare income drawdown vs annuity purchase for DC pension. Drawdown: flexible, pass remaining pot to beneficiaries, investment risk. Annuity: guaranteed income for life, no investment risk, no residual value. Break-even and risk analysis.

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$ Finance Disclaimer: These calculators are for educational and illustrative purposes only. Results do not constitute financial advice. Consult a licensed financial advisor before making investment or borrowing decisions.

How to Use

Enter the values for the scenario you are assessing. Compare income drawdown vs annuity purchase for DC pension. Drawdown: flexible, pass remaining pot to beneficiaries, investment risk. Annuity: guaranteed income for life, no investment risk, no residual value. Break-even and risk analysis. Use the drawdown vs annuity result to inform your calculation.

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Frequently Asked Questions

What is the key tradeoff between drawdown and annuity?

What is a typical annuity rate for a 65-year-old?

What is a blended approach?