Annuity Insurance for Retirement: The Longer You Live, the More You Collect

A downturn can be enough to keep people from retiring. In 2011, Taiwanese life insurers observed that many workers were postponing retirement because of a weak economy — not because they wanted to keep working, but because they could not afford to stop. Their advice: rather than wait passively for the economy to recover, start an annuity plan early and convert a lump sum into a cash flow that grows the longer you live.

What is annuity insurance?

Annuity insurance is a product that pays out in periodic instalments. After paying premiums, the policyholder receives regular annuity payments from the insurer once the policy matures, running until death or the end of the agreed term; its core value is converting the risk of mismanaging a lump-sum pension into a predictable lifetime income — hedging longevity risk with longevity itself.

Immediate vs deferred annuities

By payout start date, annuities fall into two main types:

Why start early?

Surveys show most people give the same reason for not preparing for retirement: debt, education costs and living expenses leave nothing spare. But insurers warn that waiting until old age to start usually means either too little time to build wealth at work, or much higher savings costs with too short an accumulation period. “Start early” and “keep at it” are the two non-negotiables of retirement saving.

How should young people begin?

Insurers advise a gradual approach — there is no need to commit tens of thousands a month from day one:

1. Start small: begin with, say, NT$3,000 or NT$5,000 a month to avoid abandoning the plan under strain.
2. Top up as income stabilises: raise contributions once salary growth allows.
3. Use the power of compounding: the earlier you start, the harder compounding works — and the later you start, the more each month must cost to reach the same goal.

Beyond annuities, MPF is another key pillar of retirement planning; for the broader picture, see the retirement education hub.