More research into link between annuities and wellbeing

03 July 2025

Last year, retirees with annuities reported greater satisfaction and fewer financial worries as part of L&G research. A recent report now suggests similar benefits are felt in the USA and Canada.

Back in December 2024, we reported that a UK study revealed that retirees using an annuity to take their pension income enjoy higher satisfaction levels and fewer financial concerns compared to those without one. 

That research was conducted by Legal & General in collaboration with the Happiness Research Institute. It highlighted several key differences between retirees with and without pension annuities – including higher satisfaction with their daily life, less stress, and a greater likelihood of meeting regular payments such as loan repayments than those relying on other income sources.

Now, a report by Teresa Ghilarducci from the New School (a university founded in New York City in 1919) for Forbes.com suggest that similar benefits are felt by people receiving guaranteed annuity income in the USA and Canada.

Health and stress benefits

Ms Ghilarducci’s article focuses on the reported health benefits of receiving regular guaranteed income for the rest of one’s life from an annuity. 

For example, she mentions the potential stress that can come from having to manage a lump sum in later life - which can be very rewarding for those who get it right, but also very painful for those who don’t, potentially leading to the loss of some of their pension income:“The stress of managing a lump sum is immense. Annuities help solve what Nobel laureate William Sharpe called the ‘nastiest problem in finance’: how to make a lump sum last for an uncertain lifespan.”

Ms Ghilarducci continues: “Annuities can improve well-being by encouraging healthier behaviour, reducing stress, and providing a stable income for life. Retirees with annuities report higher satisfaction, lower depression, and even biological markers of better health.”

For example, she points to a recent study which found that “individuals expecting annuity payments expressed a willingness to invest in relatively expensive health checks and pay for more intensive exercise programs than their current routine”.

She writes: “Even more notably, people who anticipated receiving an annuity actually increased the intensity of their exercise, compared to those who expected to receive a lump sum. Researchers hypothesize that knowing they can beat the bank by living longer than expected prompts them to stay healthy.”

In addition, she mentions Canadian research from 2024. This found that: “More stable income - like that provided by annuities - reduced biological stress markers.”

Ms Ghilarducci also references an article from 2005 entitled ‘What makes retirees happy?’. This reported that: “Annuities from pensions increase retirement satisfaction and reduce the number of depression symptoms.”

Would an annuity be a good choice for your retirement income?

Underpinning the apparent health and wellbeing benefits of annuities highlighted in both UK and North American research is the guaranteed income that annuities bring. 

Once purchased, an annuity provides a stable income, unaffected by future changes in interest rates or in the stock markets. You can choose to take your income for the rest of your life, or for a set amount of time – both with optional inbuilt financial protection from early demise to protect loved ones.

What’s more, with recent annuity rates close to record highs, annuities now generate much more income than was the case just a few years ago. In addition, enhanced annuities can further increase income levels, some quite substantially, for those who qualify on account of medical conditions or lifestyle choices such as smoking.

Retirement Line’s annuity quotes and information service

If you are considering an annuity for your retirement income, you can speak to one of our Annuity Specialists today by calling freephone 0800 652 1316 or request a call back. Alternatively, use our free online tools for an instant estimate of how much annuity income you might expect to secure.

This is a serious matter as your pension fund could be the largest sum of money you have to invest in later life. We have your very best interests at the heart of our business - please remember that we are the UK’s largest annuity broker* and, for your peace of mind, we are Trustpilot’s #1 firm in their pension fund category with a maximum 5.0 ‘excellent’ rating across more than 4,000 reviews. You can see all our Trustpilot reviews at:https://uk.trustpilot.com/review/retirementline.co.uk

There is no charge for our annuity quotation service: only if you proceed to buy an annuity would we be paid a commission by your selected annuity provider, which is reflected in their annuity rate and declared on their quotations.