This is an almost impossible question to answer without knowing more about you, your circumstances and your appetite for risk.
The main benefits of an annuity are that it will provide you with a guaranteed income for the rest of your life, no matter how long you live. The income you receive from an annuity also doesn’t depend on the performance of any underlying investments. The stock market could crash tomorrow and with an annuity you’d still be receiving the same income regardless.
For this reason, cautious investors (or those who want to take no investment risk at all), as well as those with smaller pension pots, may prefer an annuity because of the lack of risk to them and the fact that it won’t run out.
However, annuity rates have been poor in recent years, meaning it’s become more expensive to purchase the same income using an annuity than was the case in decades gone by.
As such, people are looking to the flexibility of drawdown and the ability to remain invested in the markets for potential future investment growth to provide them with what could be a more prosperous retirement than an annuity, albeit taking onboard all of the risks of remaining invested throughout retirement.
The risk with drawdown, of course, is that the money could run out and your income is dependent largely on the performance of the underlying investments. Some people aren’t comfortable with such risks and so an annuity is likely to be a better option.
If, however, you want more freedom and flexibility, then drawdown could be a better option.
To discuss the difference between drawdown and an annuity, don’t hesitate to speak to your adviser today.