Annuities can convert an uncertain retirement corpus into a defined, contractual income stream, which reduces the risk of outliving your savings, a genuine risk given increasing life expectancy. Certain options can guarantee payments for as long as you live, regardless of how long that turns out to be, shifting that specific longevity risk from you to the insurer. Joint-life options can extend that security to a spouse, and some annuities offer inflation-linked or increasing payment structures to help income keep some pace with rising costs over a long retirement. For someone who wants certainty and simplicity in retirement income, rather than actively managing a corpus and deciding how much to withdraw each year, an annuity can meaningfully simplify that decision.

The annuity option you choose at the start is generally locked in and very difficult to alter later, so a decision that felt right at the time can turn out to be a poor fit if your circumstances change. Annuity payouts are typically fixed in nominal terms unless you specifically choose an inflation-linked option, which means the real purchasing power of a level payment can erode over a long retirement. Because annuities prioritise certainty over growth, their returns are usually lower than what a well-managed market-linked investment might achieve over the same period, and most annuities offer little to no liquidity if you need a lump sum unexpectedly. Comparing annuity rates and features across insurers matters more than the headline monthly payout.