Ormston says people who do this typically purchase the annuity to provide a secure income to cover essential expenditures as well as longevity protection, while the funds in drawdown continue to provide investment exposure and flexibility.
Another approach could be to purchase an annuity (or annuities) in later life, which Ormston says not only removes longevity risk but also removes investment exposure and the need for investment management.
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“Many have said this approach could mitigate the risk of making financial decisions during any potential periods of cognitive decline,” he adds.
Ima Jackson-Obot is deputy features editor of FTAdviser
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