Annuity vs Drawdown Calculator NZ

Retiring with a lump sum often means choosing between a guaranteed income for life and managing your own drawdown, and this calculator helps you weigh up both options side by side. You enter your lump sum available, the guaranteed annual income an annuity-style product has offered you, the annual amount you would want to draw down instead, and the expected return you could earn while that money stays invested. The calculator shows your guaranteed income for life alongside how many years your drawdown would last at that withdrawal rate and return, then gives you a quick verdict on whether the certainty of a guaranteed income or the flexibility of drawdown looks stronger for your numbers. If your drawdown would comfortably outlast a typical retirement, the tool leans toward drawdown; if it would run out well before then, the guaranteed income looks the safer bet. Use it to test different lump sums, income levels and return assumptions, and remember that an annuity usually leaves nothing behind while drawdown can leave a balance for your family but carries the risk of running out early. Many retirees blend the two, covering essential costs with a guaranteed income and keeping the rest flexible. This is an indicative estimate only, not financial advice, and you should get personalised guidance before making retirement income decisions.

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Drawdown offers flexibility and likely lasts
at the same yearly income
Guaranteed income, for life$28,000
Drawdown lasts32 years

An annuity removes the risk of running out but usually leaves nothing behind; drawdown is flexible and can leave a balance but may run out. Many people blend the two. Estimate only, not financial advice.

How it works

The calculator shows the guaranteed income an annuity-style product would pay from your lump sum, then models the drawdown, keeping the lump sum invested at your expected return while you withdraw your chosen amount each year, and counts how long it lasts. If the drawdown would last well beyond a typical retirement, it leans toward drawdown for flexibility; if it would run out early, the certainty of the guaranteed income looks stronger.

Worked example

On a $500,000 lump sum, a guaranteed income of $28,000 a year is paid for life. Drawing the same $28,000 a year at a 4% return, the drawdown lasts around 32 years before running out, so someone retiring at 65 might prefer the certainty, while someone wanting flexibility and a possible inheritance might prefer drawdown.

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Frequently asked questions

What is the difference between an annuity and drawdown?

An annuity-style product pays a steady, guaranteed income for life or a set term in exchange for your lump sum. Drawdown keeps your money invested and you withdraw from it yourself, with more flexibility and the chance of growth, but the risk it runs out.

Which is better, an annuity or drawdown?

Neither is always better. An annuity gives certainty and removes the worry of running out, while drawdown offers flexibility, potential growth and the chance to leave a balance behind. The right choice depends on your need for certainty and your other income.

Can I combine the two?

Yes, many people use a mix, covering essential spending with a guaranteed income and keeping the rest in drawdown for flexibility. Comparing the two incomes here helps you decide how much to allocate to each.