The rate you may receive for an annuity is determined by a combination of factors; some of which you choose and others that are circumstantial. In most cases it is still recommended you utilise the open market option to make the most of your situation.
Factors which could lead to a higher retirement income:
- If you have suffered from ill health which could reduce your life expectancy.
- If you have ever smoked; this again reduces your life expectancy.
- The older you are the higher your income could be.
- If you are male, your income is likely to be higher as your life expectancy is lower.
- The area in which you live may also increase your income if life expectancy is lower within your region, than in others
- A level annuity may lead to a higher starting income then most, although your spending power is at risk of erosion by inflation.
Factors which could reduce your retirement income:
- If you choose to protect your annuity when you die, you can expect to receive a lower income
- If you index link or opt for percentage increasing annuity, you will receive a lower income to begin with
- If you purchase your annuity when interest rates are low, you should expect annuity rates to reflect this
- If you don’t take advantage of the open market option you could be missing out on increasing your income by up to 40%
- Opting for a joint annuity – your annuity will pass onto your spouse or partner after your death
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