Turning your pension savings into an income for life

 

Few people have any idea how long they are likely to live. Knowing that an income will be paid however long you live is very reassuring. This is where annuities can help.

 

An annuity is a product insurance companies offer and it works like this:  Basically, you give the insurance company the balance of your pension savings, after you’ve taken any cash lump sum. In return, the insurance company will pay you an income every year for the rest of your life.  However long you live.

 

If you’re interested in buying an annuity, the first point to remember is that you don’t have to accept an annuity offered by the company you’ve saved with.  Everyone has the right to shop around at retirement for the best deal. 

 

It’s just like buying car insurance, except that the stakes are higher. With car insurance, if you don’t shop around this year, there’s always next year. That’s not the case at retirement.  For most people, this is a single, irreversible, one-off decision.  A bad choice could cost you dearly. Yet it’s easy to make the right decision.

 

What do I have to do?
If you are thinking of choosing an annuity to provide your income in retirement, there are three decisions to make:

  • Identify the right type of annuity
  • Select the options you want
  • Choose which company to go with

 

Remember, you don’t have to buy an annuity these days, but an annuity is still the only way to provide a guaranteed income for life. If that appeals to you, the first step is to to decide what type of annuity?

Tempted to take 100% cash?

Try our tax calculator first

 

Think you know about retirement?

Take our quiz and find out

Budget planner

Use our budget planner to check your finances