As you approach or settle into retirement, one of the most important decisions you’ll make is how to manage your income. You want peace of mind, flexibility, and the confidence that your money will last. That’s where blended annuities come in – a retirement income solution that combines the best of both worlds. But with so much jargon and misinformation out there, it’s easy to feel overwhelmed. Let’s clear the air and bust some common myths about blended annuities.
What is a Blended Annuity?
A blended annuity is a combination of two financial products: a living annuity and a life annuity. Think of it as a single solution that offers both guaranteed income for life and flexibility to grow your money. It’s designed to give you the security of knowing you’ll never run out of income, while still allowing you to benefit from market growth and leave a legacy if you wish.
Myth #1: “Blending is too complicated”
It might sound complex, but the idea is simple. A blended annuity brings together two retirement income sources under one roof. The life annuity portion gives you a steady, guaranteed income – no matter how long you live. The living annuity portion lets you stay invested in the market, giving your money the chance to grow and adapt to your needs. With the help of a financial adviser, understanding how the two parts work together becomes much easier.
Myth #2: “A living annuity is enough on its own”
Living annuities are popular because they offer flexibility. But they also come with risks – like market downturns or outliving your savings. A blended annuity helps reduce those risks by securing a portion of your income for life. This means you can draw less from your living annuity, giving it more time to grow and last longer.
Myth #3: “You should only blend when you’re older”
Some believe that blending only makes sense later in retirement. But in reality, the earlier you blend, the more you can benefit from the guaranteed income and reduced drawdown pressure. Starting earlier can also help you plan more confidently for the long term, especially if you’re concerned about rising living costs or unexpected expenses.
Myth #4: “Blending is more expensive than doing it myself”
It might seem cheaper to buy a living annuity and a life annuity separately. But managing two products means paying two sets of fees and dealing with more complexity. A blended annuity simplifies things by combining both into one product, often with lower overall costs and easier tax application and administration.
Myth #5: “Blended annuities are the same as hybrid annuities”
While the terms are sometimes used interchangeably, they’re not the same. A blended annuity is a specific structure where the life and living annuity components are housed within a single product. This makes it easier to manage and often more cost-effective than holding two separate products.
Why Blending Might Be Right for You
If you’re looking for a retirement income solution that balances security and flexibility, a blended annuity could be a great fit. It’s especially useful if:
• You want to protect yourself from outliving your savings.
• You’d like to leave a financial legacy.
• You prefer a steady income but still want some market exposure.
• You value security and peace of mind.
Final Thoughts
Retirement should be about enjoying life, not worrying about money. Blended annuities offer a smart, balanced approach to managing your income – giving you the confidence to live your golden years on your terms. If you’re unsure whether blending is right for you, contact Just SA for more information or speak to a trusted financial adviser who can help tailor a solution to your needs.
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I don’t think such a thing as a blended annuity was available years ago! As a widow I am fortunate to have 75% of my late husband’s pension & have money invested with a financial advisor which is a blend of shares & finance. As the pension is guaranteed with an annual increment until my death, I don’t see the need to change this. Had the blended annuity been available at the time we might have made a different decision as the investment money was originally in a Living Annuity but changed upon his death when I consulted an investment advisor.
Hi Ginny, it sounds like you are well positioned for a secure financial future with a guaranteed income for life. Well done!
You are correct, a blended annuity is a fairly recent annuity development and has only been available in South Africa since 2017 and is gaining in popularity, especially for those who are at, or approaching, retirement age.
A financial adviser can help determine which product is best for retirees – a pure living annuity, a pure life annuity or a blend of the two. We help advisers with this by providing a framework of three possible scenarios (or zones) for living annuity investors. If YEI readers are interested, you can read more about this here (you may need to copy and paste this link to a browser):
https://justsa.co.za/news/safe-risky-or-danger-which-retirement-zone-are-you-in/