Tag Archives: Guaranteed Income

Alternative Annuity Options

In years gone by there was very little choice for those arriving at their retirement. Your choice would have been to take up to 25% of your pension fund as a tax free cash sum then use the balance to purchase a guaranteed income for the rest of your life in the form of an annuity or you could move into income drawdown. Typically someone with a lower investment risk profile would purchase an annuity as the income paid to them would not be dependent on investment performance, whilst someone wanting more flexibility and potential for investment growth may consider the income drawdown option.

By making a decision to purchase an annuity you are making a choice that will last for your lifetime. The options chosen when you purchase cannot be altered in the future should your circumstances change. An example of this could be that you purchase an annuity when you retire at the age of 65 and at that time you were fit and healthy and could only secure your annuity on standard terms. Five years later you find that your health deteriorates and you could have achieved a much higher annuity rate on enhanced terms.

There are temporary annuities available that can secure your income over the shorter term then guarantee a figure that will be payable after the fixed term therefore allowing you to review the annuity rates available, effectively delaying the final decision about the purchase of your annuity and possibly allow you to benefit from potentially higher annuity rates at a later date or to purchase an enhanced annuity if your health has deteriorated. It should be noted however that this option would carry the risk that once your plan reached its maturity date annuity rates may well be less than they are at the start therefore leaving you in the position where you could see a reduction in the level of your income.

Another alternative to the standard annuity would be a with profits annuity. These plans allow you to set your income level within certain parameters. They will generally guarantee a minimum income level and the balance of the income is dependent upon the profits declared by the annuity provider. If the income level is set at a relatively low level you should see growth in your income therefore giving you the potential for your income to keep pace with inflation. Usually part of the increase in your income will be guaranteed. The danger with this type of plan is to set the income level at the upper end of the scale because if the bonus rate required to achieve that level of income is not declared you could see your income reduce. Worthwhile considering if you have other sources of income in retirement and you can absorb the fluctuations that this type of annuity my present.

Guaranteed Annuities can secure your retirement future

Annuities are one of the most common and popular ways to turn pension savings into a regular income during retirement. There are many different types of annuities – and fixed guaranteed annuities and variable annuities are the two main types. Guaranteed annuities provide a guaranteed income during old age, either until you die or for a fixed, predetermined period of time.

As opposed to variable annuities, guaranteed Annuities or level annuities offer a guaranteed income to be paid for a fixed period of time. This can be for a fixed period such as five or ten years, or in case of lifetime fixed annuities, until the end of life. Guaranteed annuities offer the peace of mind and security of knowing exactly how much you will receive and for exactly how long.

Having the security of knowing that you have a fixed, regular income no matter what can not only offer peace of mind but can also be very useful when planning your budget in the short term, as well as the long term. Knowing exactly how much your income is going to be can help you plan your finances and adjust your lifestyle to suit your income. You can also plan ahead for any additional expenses and make sure that you have enough money when you need it.

With rising costs of living, rising inflation and people living for longer than ever before, financial planning during retirement has become extremely important. A proper budget is one of the most important tools for financial planning when you have a limited income – and this is especially relevant during retirement, as retirement is the time when most people need to optimise their life savings in order to make the most of them. A retirement income is meant to support your day to day expenses, as well as any other expenses you may have from time to time, and guaranteed annuities can help you plan these expenses properly.

For instance, if you need to plan a big one off expense such as a holiday, a gift to your children, or home improvement works, you can plan it ahead so that you have enough money to meet your monthly expenses and enough saved up for the one off expenditure.

A fixed guaranteed annuity offers a steady and stable source of income for a fixed period of time, or until the end of life, depending on the terms of the annuity purchased. Since you know exactly how much money you will receive, at what intervals, and until when – you have the freedom to plan your expenses in a manner most suitable and comfortable to you. For those who rely solely on their annuity for income during retirement, guaranteed annuities can offer the most reliable and stable form of financial security.

Annuity Rules Are The Biggest Misconception

An annuity is an important tool in the retirement sector, which allows you to draw your pension fund as regular income during retirement. Investing your hard earned life savings into an annuity is a very important decision indeed, and it is vital to shop around not only for the most suitable annuity type, but also for the most suitable annuity provider for you.

The biggest misconception when it comes to annuities is that one is required to set up an annuity with their pension provider. The truth is that thanks to the open market option, there is absolutely no need to be limited to your pension provider for an annuity. In fact, the Government is trying to encourage people to use the open market option and shop around for the best annuity deal before investing.

Annuity rates can vary very widely between providers. Also, the variety of annuity products available means that different annuities will have different rates even from a single provider. So a company that offers the best rates with one type of annuity may not necessarily do so with a different type of annuity.

The first step towards finding the right annuity, therefore, is to understand your own needs and find out what type of annuity works best for you. For instance, would you need a single life annuity, or a joint annuity? Would you rather have a guaranteed income for life, or invest in a higher risk investment linked annuity? Would you need a fixed annuity with fixed payments for life, or an escalating annuity? These are some of the questions that need to be answered before you can shop around for the best annuity quote.

Your pension provider is bound to offer a quote, and there is no reason why you should not consider this quote, as there is every possibility that it will not only be competitive but may even be better than the open market options. The point is not to limit your options, but to shop around and make an informed choice about this important step in life.

The Financial Services Authority has worked hard to ensure that pensioners have the right to exercise an open market option and shop around for annuity quotes. The FSA continues to encourage people to use this option and has also made it mandatory for your pension provider to remind you of this option while offering a quote. That you must purchase an annuity from your pension provider is a myth, but thankfully, one that is continuing to diminish rapidly.

Instant Annuity Quotes Available Online

Annuities have become incredibly popular in the world of investments and retirement planning. For many, annuities serve to promote a retirement life that is worry-free, establishing a guaranteed income in some amount and allowing the consumer to budget for the years following their employment. For many, this investment strategy is priceless. There are several benefits to investing in an annuity. Most consumers take a portion of their pension to fund their annuity, allowing themselves to budget for a predetermined monthly income over the course of their retirement.  Using this strategy often leaves consumers questioning the amount they can anticipate once they retire. If consumers do want to invest in an annuity, they need to know what they can expect for guaranteed income. For most, they can simply input data online and find exactly what they need.

As technology has evolved to help make tasks easier, simpler, and friendlier for the user, financial services have become far more manageable for the average consumer and investor. This is especially true for those looking to invest in annuities. Annuity Quotes are available right online for most consumers and can be determined far easier than they ever could in the past. In fact, what used to take a visit to a financial adviser can now be determined right online by the consumer themselves.

Consumers can find their annuity quotes online fairly easily. The data entered is simple and can be filled in independently by the investor. Examples of information needed include age and the age of spouse if applicable and estimated pension value.  Consumers can even search for the best quote simply by creating criteria by which to search. They can search using health rates, smoker rates, guarantee period, purchase price, and escalation rates. Several websites even offer the consumer tips on how to use an annuity calculator to give them the most reliable rate or quote. These tips include applicable information on when to buy an annuity, age, state of health, the pension of a spouse, and gender.

Research is a crucial part of any investment strategy. This is especially true of annuity investments given that the income they produce most often sustains lifestyle during retirement. There can never be too much research done on the appropriate path to take when investing in an annuity. Annuity quotes are part of this research and because of technological advancements, most consumers can find annuity quotes online very easily. This can help them budget and plan for the future.