Annuities have been around a long time.
While they can sound complex, they are simply a way to convert potentially some of your super or other savings into a guaranteed income stream for life.
One major benefit is how Centrelink treats them. An annuity doesn’t count dollar-for-dollar under the ‘assets test’. Instead, only 60 per cent of the purchase amount is assessed.
For example, if you invest $100,000, Centrelink will only assess $60,000 as an asset.
If you are over a certain age, this drops to 30 per cent — potentially giving you a much better age pension outcome.
The income you receive from an annuity can be fixed, indexed or linked to investments, but the key is that it is guaranteed for life.
Annuities may be useful for people just above the age pension threshold or for those hoping to increase their Centrelink benefits. They can offer income certainty when used thoughtfully as part of a broader financial strategy.
That said, they don’t suit everyone, and there are different types and rules to understand.
So, it is essential to speak with your adviser to determine whether an annuity fits your personal retirement strategy.
Mandy Newman, Director, AJN Financial, 15/13 Poinciana Avenue, Tewantin, 5430 6631, ajnfinancial.com.au
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