In your golden years, annuities make sense

  • If you stop working, would you like to maintain your lifestyle?
  • Do you want your income stream during your golden years to be predictable and stable?
  • Would you like to have peace of mind knowing that your retirement payouts will be guaranteed?
  • Is it important to you to have flexibility in how you contribute to the plan and withdraw from it?
  • In the event of your death, would you like your dependents to be provided for as well?
  • Can you benefit from an additional guaranteed income in case of long-term care?

In any retirement plan, an annuity or retirement income plan serves as an important supplementary income source, whether you are a young working adult, a parent with young children, or someone close to retirement.

The following six reasons make them so important:

Similarly, an annuity acts as the bedrock of your retirement plan, just as whole life insurance and health insurance do for your risk management.

  1. Principal Protection / Capital Guaranteed:
    No investment risk. Your money is safe and will not fluctuate like investments.
  2. Guaranteed Income Payouts:
    A steady income stream. On a regular basis, you will receive a fixed payout.
  3. Flexibility:
    Flexibility is common in most plans.
  4. You can choose whether to take a lump sum or a regular income payout before pay-outs begin.
  5. You can surrender the plan during the payout period even if you’re receiving regular income pay-outs. A good retirement income plan should guarantee the capital by the time payouts begin. This is important because things may change in the future and such flexibility ensures that you can have access to funds.
  6. It is possible to fund your retirement income plan with a lump sum (usually for people with excess cash) or allocate a small amount on a regular basis (for example, monthly or yearly) so that your cash flow is less stressed. – (Funding method

Make sure your income stream matches your retirement lifestyle by optimizing the payout duration. In most plans, you can select the payout duration, for example, 10, 15, 20, or more years. Consider a retirement plan that pays out for as long as you live if you are concerned about lifelong income. As a result, longevity risk is reduced, reducing the possibility of outliving your assets.

Interest Rates Could Be Higher:
Savings idling in a bank account could devalue over time due to inflation. Inflation refers to prices increasing every year, sometimes without your awareness. Five years ago, a cup of local coffee cost $1.30. Today, the same cup costs $1.90. The price has risen by 46%!

Annuities and retirement income plans don’t yield high returns. Nevertheless, your money is protected and grows faster than it would in a bank savings account. You may also be able to hedge against inflation with a total return that is not guaranteed.

A Diversified Approach:
It is true that bank accounts provide safety and liquidity, but that is all they do. There is the potential for higher interest rates with investments, but they are subject to market volatility. It requires both time and resources to manage your own investment portfolio. Please don’t get me wrong – I don’t recommend putting all your hard-earned money in a bank account or in investments. It is important to strike a balance, however. Risks should be spread across a variety of assets through diversification.

Insurance for long-term care:
During your retirement years, you can receive an additional stream of income if you become disabled. Medical and personal care costs increase as we age. Consider a retirement plan that provides an increased income pay out upon disability instead of burning your finances on long-term care. Certain conditions may be required by insurers, such as failure to perform two or three out of six Activities of Daily Living.

A retirement income plan or annuity provides safety, surety and stability. It delivers:

  • Predictable income stream through guaranteed payouts.
  • Low risk investment gains through non-guaranteed cash bonus.

Once this foundation is put in place, you can then afford to take a little more risk in growing your money.

How To Find The Best Retirement Income Plan:
Depending on your age and needs, you can take up different courses. Planning for retirement should be viewed holistically, taking into account all aspects of a well-rounded retirement plan.

To achieve the outcome you want, you may require one or more plans. In order to cover all of your financial needs and objectives after retirement, you can structure your retirement plan with multiple annuities or retirement income plans.

To secure a retirement income plan that is right for you, contact me today!


Important: The information and opinions in this article are for general information purposes only. They should not be relied on as professional financial advice. Readers should seek independent financial advice that is customised to their specific financial objectives, situations & needs. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.

Published By:

Pauline Wong Wai Yee

My father purchased a savings plan for himself and for my mother when I was a child. I was impressed by the well-dressed banker from 大华银行 who visited my father. A few years later, my dad lost his business and used the payout from the policy to help the family get through those difficult times. That’s when I learned the importance of saving for rainy days. At the age of 21, I bought myself a savings plan from my 2nd month’s paycheck.

Having started my career in the financial industry in 1996, I believe that individuals should be empowered to take charge of their own financial planning. This will enable them to achieve their desired lifestyle.

More than ever before, clients are looking for trusted advisers. I believe in developing and leveraging knowledge and technology to offer the best service to them. The goal is to take them on a financial transformation journey. Having said that, a  career in the financial advisory industry is more than just a job, With a passion for helping others make sound financial decisions
Over the course of my 26 years in the financial industry, I have advised more than 500 clients about their financial plans according to their life stages. I have personally handled five death claims ( Very heartbroken episode)  and helped more than 50 clients draft Wills.

Over the course of my career, I have faced betrayals, departures, and disappointments. In spite of this, I still believe that life is beautiful because of its tenderness. Therefore, I will try to look at things positively.  I am a firm believer we need to be constantly learning new things, during Covid period in 2019, I took an NLP coaching course, I am also a certified life coach now. I love to go beyond other than finance matters.  

As far as client relationships are concerned, my career philosophy is:
It is imperative to maintain integrity, be transparent, have accurate information, and give wise advice. If you can’t convince yourself, don’t try to convince anyone else.

Please reach out to me for an informal session to discuss how I can help you in your financial fitness !


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