The Whole Picture on Annuities: Creating a strong foundation for retirement planning

A financially secured retirement stands strong on the foundation of a stable income that will last a lifetime. Consequently, annuities have become the foundation for maintaining economic independence, post-retirement. Factors like higher life expectancy, rising inflation and market volatility have made the need for predictable income more critical than ever before. The retirement planning of today goes much beyond just saving, it requires creating a dependable income stream that can sustain individuals through longer post-retirement years.

Money may not buy happiness, but a predictable income flow is necessary for ensuring peace of mind in an uncertain world. From being looked upon as just an instrument for fixed returns, annuities have come a long way to represent financial reliability and reassurance post-retirement. The recent India Retirement Index Study 5.0 (IRIS 5.0)  conducted by Axis Max Life Insurance in partnership with Kantar estimates that nearly 120 million Indians will enter the retirement cohort over the next 5–10 years. This signals an upcoming trend of a rising demand for stable, guaranteed income solutions. 

Annuities – converting savings into lifelong financial security

According to the IRIS 5.0 study, the country’s retirement readiness index score has experienced a significant increase, rising to 48 in 2025, up from 44 in the last three years. However, it also shows signs of a major retirement preparedness gap. While 70% of urban Indians feel confident about retirement, far fewer have secured a lifelong income. Moreover, 77% of them believe ₹1 crore or less is enough for a peaceful retirement, which is a gross underestimation that severely ignores decades of inflationary pressure. 

Traditionally, Annuities were viewed simply as instruments offering fixed returns. Today, they have evolved to represent reassurance, reliability and a safeguard against both longevity and market-related risks. Annuities are an ideal tool to bridge this wide gap, as it helps transform wealth into consistent, predictable income, allowing individuals to balance stability with flexibility.

The pillars of a strong retirement foundation

As per the IRIS 5.0 study, fear of future financial insecurity is a major trigger for retirement planning, but it still gets deprioritised. Today’s young professionals tend to treat retirement as an abstract, distant concept overshadowed by more immediate life goals like securing a home loan, planning a wedding, or raising a family. Regular, annuity payouts help address barriers such as lack of awareness and the belief that retirement planning can be postponed. Annuities ensure income certainty, along with several other benefits, here’s how. 

Stability: Annuity is the only type of financial product that provides guaranteed income for the entire lifetime - offering a higher level of protection against longevity risk. A retired person can spend as per their will and choice, long after their regular salary has stopped and avoid being financially dependent on others.
 
Flexibility: Annuities can be customised to short or long-term goals with immediate or deferred beginning dates, while also aligning the payout options fixed or increasing (also known as inflation-indexed) to help address inflation. Increasing options include preset annual step-ups and, where available, inflation linked payouts so income can better keep pace with rising costs. At the same time, these plans can also extend protection to one’s spouse, securing a retired couple’s joint future. There is also an option of Return of Premium on the death of the policyholder, which works as a legacy corpus often left by the annuitant for their loved ones.

Building the momentum for financial confidence

Annuities are redefining retirement planning in India by acting as a steady income that can cover essentials such as healthcare, housing and daily expenses - allowing retirees to live with peace of mind, free from impact of market fluctuations. 

Regulatory reforms are further building momentum and accelerating this shift by simplifying annuity structures, enhancing transparency, and promoting wider adoption. Insurers are complementing these efforts with inflation-protected payouts, digital self-service tools, and personalised advisory models, making annuity income more accessible and customer-centric than ever before. 

Living with dignity 

Investing in annuities helps build a regular income for senior citizens, who may have limited pension income after retirement. In India, when it comes to financial planning for retired life, awareness is rising faster than action. As per IRIS 5.0 study, even as 43% of respondents, feel planning should start before 35, only 37% of them have achieved even a quarter of their target corpus. At the same time, financial sufficiency remains low, with 63% of respondents believing their savings would last less than 10 years after retirement. This sentiment will change only when people realise that to live a dignified retired life, planning has to begin early. Remember, a strong retirement plan isn’t about returns that offer financial protection; it’s about an income with long-term reliability.  

The author is the Executive Vice President, Axis Max Life Insurance Limited