7 November 2025
The retirement landscape is shifting rapidly. People are living longer, market conditions remain volatile, and inflation continues to erode purchasing power. These dynamics are placing growing pressure on clients to secure sustainable, long-term retirement income.
For many years, living annuities have been the go-to solution. But recently, life annuities have
re-emerged as a serious contender in retirement income strategies—offering a level of certainty that is increasingly attractive in uncertain times.
Life Annuities: an old solution, back in focus
While not a new product, life annuities are experiencing renewed interest, particularly in the wake of the COVID-19 pandemic. The financial aftermath—marked by job losses, early retirements, and heightened market volatility—prompted clients and advisors alike to re-evaluate their approach to income security. At the same time, due to all the uncertainty in the markets, life annuity rates became more attractive, making them a timely and relevant option.
This shift has encouraged more financial intermediaries to reconsider life annuities, even those who may have previously overlooked them. What’s becoming clear is that life annuities have earned a more prominent role in modern retirement planning.
Why the growing appeal?
The core appeal of a life annuity lies in its guaranteed, lifelong income. It’s a “set-and-forget” product: clients know exactly what income they’ll receive for the rest of their lives, mitigating any uncertainty, and the risk of outliving their savings.
Additional benefits enhance its value:
- Inflation protection through optional annual income escalations.
- Guaranteed income payment terms that enable income planning.
- Joint life options to provide lifetime income for a spouse.
- Linked life cover for clients who also wish to leave behind a capital .
But what about living annuities?
Despite the resurgence of life annuities, living annuities still play a vital role. Their key advantage is flexibility: they allow clients to remain invested in the market, retain control over their income drawdown rates, and choose underlying investments aligned with their goals.
This is particularly attractive for clients who:
- Want to leave a capital .
- Prefer to adjust their income over time.
- Are comfortable to manage investment risk.
- Seek a greater degree of personalisation in their portfolios.
The power of combining both
The real opportunity lies not in choosing one over the other, but in intelligently combining life and living annuities to optimise retirement outcomes.
A blended strategy allows clients to:
- Enjoy flexibility in the early years of retirement.
- Introduce income certainty as they age.
- Balance risk, control, and security in line with their evolving needs.
For example, a client might initially allocate 70% to a living annuity and 30% to a life annuity. This offers the potential for market growth and flexibility, while also establishing a safety net of guaranteed income. Over time, as needs and market conditions change, additional portions of the living annuity can be converted to a life annuity.
A 50/50 allocation offers a more balanced approach, delivering both income certainty and investment flexibility—arguably the best of both worlds.
Planning for the long term
Advisers should also consider timing and market conditions. When life annuity rates are low—often due to low bond yields in stable markets —it may be prudent to delay full conversion and start with a living annuity. As rates improve, portions of that capital can then be moved to a life annuity to lock in more favourable terms.
It’s also important to consider longevity risk. Data shows that clients who draw 5 to 5.5% income from a living annuity starting at age 65, may reach an income tipping point in their mid-80s, where sustainable income becomes more difficult to maintain. A life annuity can act as an insurance policy against this scenario.
Conclusion: It’s not if, it’s how
The decision isn’t necessarily whether clients should combine life and living annuities—it’s how they should do so. The right mix depends on each client's unique balance of priorities: income security, flexibility, , and planning.
As the retirement environment continues to evolve, blended annuity strategies offer a more resilient, diversified approach to income planning. For clients and advisers alike, this could be the key to achieving better retirement outcomes - today and well into the future.
About Glacier by Sanlam
Glacier by Sanlam is your trusted partner in unlocking infinite investment opportunities. As the largest linked investment service provider, we have led the way in meeting the diverse needs of South Africans for over 27 years. Our extensive range of local and international solutions empowers investors to create, grow, and preserve their wealth. Through innovative products and expert advice, we offer infinite opportunity to achieve financial success.
