Retirement Income Isn’t Just About Annuities

Buying an annuity is one way to create income for retirement—but it’s not the only option. In fact, lots of people either avoid annuities altogether or combine them with other sources of income to give themselves more flexibility, security, or choice.

There’s no single “best” way to do it. What works for you depends on your circumstances, how much risk you’re comfortable with, and what sort of retirement lifestyle you’re aiming for.

Here are some of the other options people consider when planning how to fund life after work.

Keeping Your Pension Invested and Drawing Income as You Go

This is known as pension drawdown, and it’s a flexible way to access your retirement savings. Rather than buying an annuity straight away, you leave your pension invested and draw money from it when you need to.

The main appeal here is control. You decide how much to take out and when. If you need more in one year and less in the next, you can adjust things as you go. The downside? Because your pension is still invested, the value can go up or down depending on how the markets perform. And if you take too much out too quickly, you could run out of money later.

Some people choose to cover their essential costs with a small annuity and keep the rest of their pension in drawdown. That way, they’ve got a reliable base income and flexibility on top.

Thinking About Using Your Home to Boost Your Income?

If you own your home and don’t want to move, equity release might be something to consider. It allows you to access some of the value locked up in your property—without having to sell or move out.

There are two main ways this works:

• A lifetime mortgage, where you borrow money against your home and repay it (with interest) when you die or go into long-term care. You don’t usually make monthly repayments.
• A home reversion plan, where you sell a share of your home in return for a lump sum or regular payments, but still live there rent-free.

It’s not a decision to rush into, as equity release will reduce the value of your estate and could affect your benefits. But for some people, especially those with limited pension savings, it can provide a useful financial buffer. Always speak to a regulated adviser before committing

Using Your Savings to Invest for Income

Some people prefer to use their savings to generate income through investments. That might mean holding shares that pay dividends, buying bonds that pay interest, or even renting out a property.

The potential reward here is higher income and the chance for your money to grow. But the big caveat is that investments carry risk. The value of your money can fall, and there are no guarantees like you’d get with an annuity.

This route tends to suit those who are comfortable managing risk and can afford to ride out market ups and downs. If you’re considering investing for retirement income, it’s a good idea to get advice and spread your money across different areas to reduce risk.

Your State Pension: A Steady Income You Can Build Around

The State Pension is the one income stream most people will have in retirement. It’s not usually enough to live on by itself, but it does provide a solid base.

At the moment, the full State Pension is £221.20 a week, or just over £11,500 a year, if you’ve got 35 full years of National Insurance contributions or credits. You need at least 10 years to get anything at all.

Some people delay claiming their State Pension in return for higher payments later. If you don’t need the money right away, this can be worth looking into.

Earning a Bit in Retirement

Retirement doesn’t always mean giving up work completely. Plenty of people carry on working part-time or take on the kind of jobs they’ve always wanted to try—sometimes for money, sometimes just to stay active and involved.

That might mean freelancing, doing consultancy work, helping out in a seasonal role, or even starting a small business based on a hobby or interest.

Earning in retirement can help you delay using your pension savings, which may stretch your money further in the long run. Just keep in mind how extra income could affect your tax or benefits.

Selling Up and Downsizing

Another way to free up cash is to sell your current home and move somewhere smaller or cheaper. It’s a big decision, but for many people it makes financial and practical sense.

You might no longer need the space, want to live somewhere easier to manage, or fancy relocating to be closer to family or services. Selling a larger home could release a lump sum that you can use to top up your pension or savings, while also cutting your day-to-day living costs.

Of course, moving comes with its own challenges—both emotional and logistical—so it’s something to think through carefully.

Got a Spare Room? That Could Be Income Too

If you’ve got an empty bedroom, renting it out could bring in extra money. Under the government’s Rent a Room Scheme, you can earn up to £7,500 a year tax-free from letting out furnished accommodation in your home.

It’s a straightforward way to supplement your income, especially if you live in a well-connected area or near a university or hospital. That said, sharing your home isn’t for everyone, so think about whether it would suit your lifestyle.

Finding the Right Mix for You

There’s no one-size-fits-all answer when it comes to retirement income. Some people want absolute certainty and go for a guaranteed annuity. Others prefer the freedom and control that comes with drawdown or investment income. Many end up using a combination of different options to strike the balance that feels right for them.

Whether you’re still planning ahead or already retired, the most important thing is to be clear about what you need your income to do—and how much flexibility you’re comfortable with.

And if you’re unsure, it’s always worth speaking to a regulated financial adviser. Retirement might mark the end of working life, but it’s also the beginning of a new chapter. A bit of careful planning now can help make that chapter a whole lot more enjoyable.