2 weeks ago
Market believers can also build strong pensions with annuities
When you grow up and stop working, you need money to live on.
Some people save money by investing it in the stock market, which can grow but can also go down.
Others buy something called an annuity, where you give a company a big amount of money and they promise to pay you a little bit every month for the rest of your life.
An expert named Sarkar says you don't have to pick just one.
When you are young, you can invest in the market to grow your savings.
When you get closer to retirement, you can turn some of that money into an annuity to make sure you always have enough for basics.
This protects you if the stock market crashes right when you retire.
In India's National Pension System, people who retire at 60 can take out up to 60% of their savings at once.
The rest, at least 40%, must be used to buy an annuity.
There are also special annuities for couples, so the money keeps coming even if one person passes away.
Sarkar says annuities lock in a regular, reliable income stream for life regardless of market conditions, addressing longevity risk.
Experts advise sequencing investments by life stage: younger investors favor growth assets, while those nearing retirement convert wealth into annuities.
A sharp equity downturn just as retirement begins can reduce portfolio value and threaten the sustainability of retirement income.
Under the National Pension System (NPS), subscribers retiring at 60 can withdraw up to 60% of their corpus as a lump sum, while at least 40% must buy an annuity from an approved life insurer.
Annuity options include immediate, deferred, variable, and joint-life annuities, which can continue income for a surviving spouse.
- Who
- Sarkar, a retirement planning expert quoted in the article, and Indian investors planning for retirement
- What
- Guidance on combining market-linked investments with annuity products to secure retirement income
- Where
- India, in the context of the National Pension System (NPS)
- When
- Not specified in the article
- Why
- To address longevity risk and protect retirement income from market downturns
Key facts
- Core advice
- Combine market-linked investments with annuities rather than choosing one
- NPS retirement age
- 60
- NPS lump-sum withdrawal
- Up to 60% of accumulated corpus
- NPS annuity requirement
- At least 40% must be used to purchase an annuity from an approved life insurer
- Annuity types
- Immediate, deferred, variable, and joint-life
- Key risks addressed
- Longevity risk and market volatility at retirement
- Sarkar's description of annuities
- An 'economic shock absorber'
Quotes
Sarkar
Financial advisor discussing annuities
“By investing a lump sum with an insurer, you lock in a regular, reliable stream of income that continues for the rest of your life, regardless of market conditions.”
businesstoday.in
“The strength of a joint life annuity lies in its continuity.”
businesstoday.in










