How to Lock in Lifetime Income—Without Giving Up Investment Control

May 12, 2025

How to Lock in Lifetime Income—Without Giving Up Investment Control

Planning for retirement isn’t just about saving enough — it’s about using what you’ve saved wisely. One of the toughest financial choices you’ll face is how to turn your retirement savings into an income that lasts for the rest of your life. That’s where hybrid annuities step in — a powerful yet underused tool for South Africans looking for both security and growth.

What Is a Hybrid Annuity?

Think of a hybrid annuity as the “best of both worlds” option. It combines the guaranteed income of a life annuity (which pays you a set income for life) with the flexibility and growth potential of a living annuity, where your funds remain invested and accessible.

With a hybrid annuity, you split your retirement pot into two parts:

One portion goes into a guaranteed income stream — you’ll receive a monthly payment for life, no matter how markets perform.
The other portion remains market-linked, giving you potential for capital growth, flexibility, and the option to leave money to your heirs.

It’s like covering your essential costs with a safety net while keeping one foot in the investment world.

Why Might This Be Right for You?

If you’ve worried about market volatility, inflation, or the fear of outliving your savings, a hybrid annuity offers peace of mind. At the same time, you’re not locking away your entire nest egg — the living annuity portion still allows investment growth and estate planning options.

This approach is particularly useful for:

Those nearing or just entering retirement
People who want certainty for essentials, but flexibility for lifestyle
Anyone navigating retirement without a large pension or rental income fallback

How It Works in Practice

One real-world example is the Momentum Wealth Guaranteed Annuity Portfolio (GAP):

You invest via a living annuity platform, and allocate part of your funds to the GAP.
That portion buys a guaranteed life annuity — with options like joint life, guaranteed periods, and inflation-linked escalation.
The monthly income is paid into your account, while the rest of your money remains invested in unit trusts of your choosing.

You can typically choose how much to allocate — say, 50% for guaranteed income and 50% for investments — and some platforms allow you to adjust or transfer your structure over time.

Benefits That Make a Difference

Income for life: The GAP guarantees a monthly payment, which can increase annually.
Investment flexibility: You control how your living annuity portion is invested.
Legacy potential: Any unspent investment or remaining guarantees can go to your beneficiaries.
Inflation protection: You can link payouts to CPI or set a fixed increase.
Peace of mind: Knowing your essentials are covered helps you take a calmer, longer-term view on investments.

A Few Considerations

No financial product is without its fine print:

The guaranteed portion is irreversible — once purchased, it can’t be changed.
Costs can vary — advisor and platform fees are embedded in the annuity structure.
Rates fluctuate — the income you receive depends on interest rates and your age at the time of purchase.

It’s also worth remembering that hybrid annuities aren’t for everyone. If you’re working with a small retirement fund or already have significant guaranteed income, the simplicity of a single product might be better. But for many, the hybrid approach offers a powerful middle path.

Is a Hybrid Annuity Right for You?

If you’re looking to secure your lifestyle in retirement while still giving your money the chance to grow, a hybrid annuity could be the key. It’s not about choosing safety or opportunity — it’s about designing a plan that gives you both.

You don’t need to have it all figured out. You just need to begin.
Financial security doesn’t come from being perfect. It comes from being prepared, honest with yourself, and willing to take the next small step — even when things feel uncertain.

Foresight is here to support you with clarity, not complexity — no matter where you’re starting from.

📞 Contact us or Book a free consultation today.

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