How can annuities make for a more lucrative retirement?
If you are approaching retirement, one of your options is to buy a lifetime annuity.
11:23 18 December 2013
Retirement is a special time in your life where you now have the chance to do the things you did not have the time for before.
It is important that you have the money to do so. You must think and plan carefully because the decisions you make now cannot be undone.
What is a lifetime annuity?
A lifetime annuity is a way of transforming your pension fund into a guaranteed income for the rest of your life. You can choose various options to ensure your lifetime annuity suits your particular needs. The amount of income you get from your annuity depends on a number of factors such as the size of the fund, the annuity rates available and the factors that determine your life expectancy. It is also important to note that the income made through annuities is taxable much like earned income. Your age, lifestyle, health and geographical location are some factors that determine your life expectancy and therefore your annuity income.
You might be entitled to an enhanced annuity determined by your lifestyle or having a health risk. Enhanced annuities pay higher than conventional lifetime annuities because annuity providers assume you are likely to have a shorter life expectancy.
Key points about annuities:
- Make the right decisions now because they cannot be reversed later.
- Don't just accept the annuity suggested by your pension provider
- Shopping around can gain you as much as 20% more income per month
- Multiple pension funds can be combined to purchase an annuity
- Common health issues such as smoking, high blood pressure and diabetes can lead to even higher monthly annuity incomes
Because annuity rates vary between providers and you want to make the most of your hard-earned pension, you should shop around to get the highest annuity income possible.