Our partners at Challenger offer annuities that provide a regular income for life, or for a chosen investment term.

What is an annuity?

An annuity is a secure financial product that can be used to provide you a level of regular income in retirement. It pays you regular income either for your lifetime or for a fixed term of your choice – in return for a lump-sum investment.

An annuity can complement other retirement investments and sources of income, such as your super and the Age Pension – and can be used as the foundation of your retirement plan.

Types of annuities

Here’s a quick guide to the different types of annuities available:

Lifetime annuities

Provides a regular income for your lifetime regardless of how long you live.

Features at a glance:

• Regular payments for life (and your spouse’s life if you choose)

• Payments that start immediately or at a future date you choose (known as deferred annuities)

• Payments that can keep pace with inflation, or are linked to changes in the RBA cash rate or investment markets.

• Can pay a lump sum death benefit to your family or estate within a known withdrawal period

• Can offer the flexibility to withdraw and be paid a lump sum within a known withdrawal period if your circumstances change

• You can use your super or personal savings to invest

• Payments that are tax free if you use your super to invest and you are aged 60 or over.

Term annuities

Provides a guaranteed, regular income for a fixed term you choose with flexible capital return options at maturity.

Features at a glance:

• Regular payments for a fixed term of your choice

• You can generally choose the frequency of your payments

• You can choose to have your investment repaid at the end of the fixed term or have some or all of it repaid throughout the fixed term as part of your regular payments

• Payments that are guaranteed regardless of how investment markets perform

• You can use your super or personal savings to invest

• Payments that are tax free if you use your super to invest and you are aged 60 or over.

Why choose an annuity?

Retirement is a life-changing event. As you adjust to your new lifestyle, you’ll need to think differently about your finances. Moving from earning an income to drawing on your retirement savings and investments can be a big shift mentally. And it can bring up financial concerns you haven’t thought too much about before, such as:

  • the risk of outliving your retirement savings and becoming completely reliant on the Age Pension
  • the impact of market conditions on the value of your investments during your retirement
  • the risk that over time inflation will increase the cost of living. This means the income received from your investments may also need to increase in line with inflation to maintain your standard of living.

Annuities can help to address these concerns so you can relax and enjoy your retirement.

Benefits of annuities include

Regular income

Annuities provide a regular income, either for your lifetime or for a fixed term of your choice.

Protection against key retirement risks

Annuities can act as a safety net, helping to ensure income for your essentials needs are protected from key risks in retirement.

Helping you to spend confidently in retirement

Annuities provide cash flow certainty that can help you maintain your standard of living, providing you peace of mind.

Find out if your retirement income will last for your lifetime

With longer lifespans and less certainty in world markets, making sure your money goes the distance is more important than ever. It’s no wonder that 84% of National Seniors members rated the desire for regular and constant income as very important. But how do you make that happen?

Challenger’s Retire with confidence online tool is a simple and easy way to get started. Put your retirement income to the test and get results that show:

  • how long your retirement savings may last;
  • whether you may be eligible for the Age Pension or an increase in payments; and
  • how much annual income you could get for life by adding a lifetime income stream to your retirement income plan.
Try Challenger's Retire with confidence online tool

Get help from the experts if you’re feeling uncertain

With the recent turmoil caused by COVID-19, it can be hard not to worry. In fact, we’re hard wired to pay greater attention to bad news which can create anxiety for even the most confident investors. Talking to a financial planning professional can ensure you're following a strategy to achieve your goals.

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