The right questions you should be asking about a living annuity

I will be retiring shortly and am looking at buying a living annuity.

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I was told that the main item to consider would be costs. The plan I am looking at has an administration fee of 0.35% and an investment fee of 0.4%. Is this good?An admin fee of 0.35% and an investment fee of 0.4% gives you a total investment cost of 0.75% per year before advice fees. In today's market, that is competitive.

However, the investment fee is a bit of a red herring, as investment returns are published after the management fee has already been deducted. You should focus on the returns and volatility of the investment portfolio in addition to the cost of the investment, as these are the variables that actually determine whether your retirement works.

A living annuity is an income machine that must support you for the rest of your life. These days, retirement can easily stretch to 35 years, so investing for it cannot be casual or reactive. It requires a robust, carefully constructed investment plan - one that balances growth and stability, manages risk deliberately and is designed to withstand decades of uncertainty.