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Picture: 123RF
Picture: 123RF

Question:

I am retiring soon and would like to know if a hybrid or blended annuity (with a percentage in a living annuity and a percentage invested in a life/guaranteed annuity) is a possibility. I have been getting conflicting answers.

— A Facebook Fat Wallet Community member

Answer:

You absolutely can split between the two annuities. The living you then draw down as needed (within the minimum and maximum limits) while the guaranteed will pay you a set amount for life. Importantly, the guaranteed annuity is an insurance product and not offered by all living annuity providers. But you can split between multiple providers.

There are a few points to note. On the guaranteed annuity you’ll have to decide if you want annual escalations, to take inflation into account. Opting for escalation will reduce the initial payout amount but will help down the line as it tracks inflation. On the living annuity you can also have multiple products (across different providers if required). You may want to do this as you can then switch some funds into a guaranteed annuity later in life as circumstances change while still keeping some funds in a living annuity.

— Simon Brown, founder of Just One Lap

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