15:38 26 February 2013
There is quite a bit of information regarding annuities and drawdowns so it is best to try and compare the two. If you look at both you may find one option is more suitable than the other, or that you have the ability to do a combination of drawdown and an annuity.
Here are some of the basics of annuities and drawdowns. Since there are many different types of annuities, this will focus on the general principles of annuities and drawdowns for your retirement planning.
•You have the option to wait until later to purchase an annuity.
•You can elect payments for a minimum period of 5 to 10 years if you don’t feel you will live that long.
•Guaranteed lifetime income.
•Option to increase your payouts in the future to account for inflation.
•Options for investment-linking with some fluctuation in payout.
•Open Market Option allows you to choose your own provider.
•Options to have excess amounts paid to spouse or partner.
•Ability to draw a pension, but still leave your money invested.
•Withdrawing an income is not required.
•Potential for a tax-free lump sum of money.
•Ability to leave money for heirs.
•Manage your own investments.
These are the basics of annuities and drawdowns in a simple format to help you with your retirement planning. Typically the longer you wait to get an annuity the better your amount per pay-out will be.
It is important while you are doing your retirement planning to keep track of changes in the industry and new laws so that you can change your plans when necessary to get the best deal when you finally decide what to do for income in retirement.
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