Experts suggest blending growth assets with annuities to optimise retirement income stability, addressing longevity and sequence-of-returns risks.
For investors who believe in equities but still want certainty in retirement, the answer may be to combine both approaches rather than choose one. In remarks reported by Business Today, Sarkar argued that retirement planning works best when growth assets are used to build a corpus early on, then part of that wealth is gradually shifted into annuities as retirement draws closer. That mix, he said, allows savers to pursue market gains while also protecting the income they will need when pay cheques stop.
Annuities are designed to turn a lump sum into a dependable stream of income, usually for life. The US government’s Investor.gov says they are contracts with insurers that can address longevity risk, the danger of outliving savings, while also offering tax-deferred growth. Fidelity and other retirement guides describe them as one tool among several for people nearing retirement who need to rebalance towards income, especially when market volatility could damage a portfolio just as withdrawals begin.
That concern is often described as sequence-of-returns risk, meaning poor market performance early in retirement can have an outsized effect on how long money lasts. Industry explainers note that annuities come in several forms, including fixed, variable, immediate and deferred contracts, each with different trade-offs on income certainty, upside potential and cost. Sarkar’s point was that these products should not be seen as a rejection of markets, but as a way to shield essential spending from them.
He also pointed to the role annuities can play in India’s National Pension System, where retirees can typically take part of the corpus as a lump sum and use the rest to buy an annuity from an approved insurer. For couples, joint-life structures can continue income for a surviving spouse. The broader lesson, echoed by retirement planning guides from Fidelity and Kiplinger, is that a strong retirement plan is built in stages: accumulate first, then protect the income you will rely on later.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
