Answer Book question
Annuity for certainty and longevity protection; SWP for flexibility, inflation adjustment and leaving something behind. Most people do best with a small annuity floor and an SWP for the rest. SWP alone carries market risk; annuity alone carries inflation and liquidity risk.
Annuity for certainty and longevity protection; SWP for flexibility, inflation adjustment and leaving something behind. Most people do best with a small annuity floor and an SWP for the rest. SWP alone carries market risk; annuity alone carries inflation and liquidity risk.
A couple splits ₹40 lakh: ₹12 lakh into a joint-life annuity with return of purchase price, ₹28 lakh in a conservative hybrid fund with a 5 percent SWP. In a bad market year they reduce the SWP; the annuity keeps the floor.
SWP withdrawals are partly capital, so tax under current rules is often lighter than annuity income. SWP corpus can grow with markets and pass to heirs. Annuity cannot run out.
Essential vs. discretionary expenses Market tolerance Inheritance wishes Tax
SWP at an unsustainable rate from an equity fund. See the SWP page.
Children abroad often prefer to fund SWP structures they can monitor; parents often prefer annuity certainty. Do both.
Floor ₹7,000 from annuity; ₹11,700 from SWP at 5 percent on ₹28 lakh; pension ₹5,000. Total ₹23,700, with ₹28 lakh still liquid.
With a small corpus and no other support, annuitising more is prudent.
Compute the floor Annuity for the floor, SWP above it
What is an SWP? Should I buy an annuity?
Senior-citizen services · Kerala Rising Money
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