Drawdown or annuity — questions worth asking before you decide
Retirement income choices in the UK turn on longevity, guaranteed needs, and appetite for market risk — here are the questions that surface trade-offs.
Choosing between pension drawdown and an annuity is less about which product sounds modern and more about which risks you prefer to carry. Drawdown keeps control and investment exposure; an annuity trades flexibility for a contractual income stream.
Start with essential spending
List the monthly costs that must be met: housing, utilities, food, council tax, and any care commitments. If a large share of that floor can be covered by State Pension and a defined benefit income, drawdown on the remaining pots may feel manageable. If most essentials would rely on investment withdrawals, some form of guaranteed income deserves serious attention.
Ask about longevity and partners
How long do you and your partner need income to last? Does a surviving spouse need the same level? Annuities can include joint-life options; drawdown plans need explicit rules for what happens if one person dies first.
Stress-test the uncomfortable years
What happens if markets fall in the first five years of retirement? What if care costs arrive earlier than expected? A retirement income review should walk through these scenarios with numbers from your own pots — not generic illustrations — before any irreversible purchase.