Comparing lifetime security against capital control
Choosing between an annuity and drawdown is a core retirement dilemma: an annuity provides guaranteed income for life with no investment risk, but surrenders capital upon death.
Drawdown keeps your money invested, offering growth potential, flexible income, and remaining funds passed to heirs, but carries the risk of running out of money.
Worked example: Annuity versus drawdown comparison
On a $150,000 fund, an annuity at a 6.8% rate guarantees $10,200 annually ($204,000 total over 20 years) with $0 remaining capital. Drawdown taking 5% ($7,500) at 5.5% growth and 0.75% fees provides $150,000 in income over 20 years while preserving an estimated $142,000 pot for heirs.
Inputs for the annuity versus drawdown calculator
Fund & Rates
Enter your retirement pot, benchmark annuity rate, and expected drawdown return.
CALCULATOR QUESTIONS
Annuity vs drawdown calculator questions
Can I switch from drawdown to an annuity later in retirement?
Yes, many retirees remain in drawdown in early retirement (ages 60-75) and purchase an annuity later when higher mortality credits offer better annuity rates.