Searching for a competitive annuity
Being faced with the important task of arranging your retirement options can be a daunting prospect.
Taking the time to research your options thoroughly will certainly pay dividends in the long term.
Using a specialist comparison website is an ideal way to compare rates as the specialists have unique online annuity
tools that will enable you to search ‘whole of market’ for an annuity.
What is an annuity?
An annuity is a financial product that you buy using your pension fund. In exchange for this, the annuity company will pay you an income for the rest of your life.
Options to consider when choosing an annuity
Level or Escalating Income
The first option to consider is whether you would like your income to remain fixed or whether you would like your income to increase over time.
• The level annuity will provide a higher initial income and will ensure a guaranteed amount for the rest of your life; however inflation will reduce the value of this income over time.
• An escalating annuity can increase at a fixed percentage of either 2.5% 3% or 5% or you can choose to have the income increasing in line with the Retail Price Index (RPI). This option will mean that you would have a lower initial income but it will help to ensure your income is sufficient later on in life.
With your annuity you can choose of the option of having a guarantee period. This will ensure that if you were to pass away within the first few years of taking out the annuity your income would continue to pay out for the remainder of that time. You can choose to have a guarantee period of anything between 5 – 10 years.
This option is often valuable if you have somebody who is dependent on your income, for example a spouse or a child dependant, and will help to alleviate financial difficulties that may arise should you pass away soon after taking out the annuity.
Joint or Single Annuity
Your annuity income can pay either just to yourself, as a single annuity, or can include a pension for your spouse or dependant (usually 50% of your income) and would then continue to pay out for the rest of their life.
Whilst this option will reduce the income that would be payable to the main annuitant it will ensure that the dependant person is not left in financial difficulty when you pass away.
Do annuity rates differ?
Annuity rates can differ significantly so it is important to do your research before finalising your decisions. Talking through the options available to you will help you decide on the choice that best suits your circumstances. At PayingTooMuch.com you can speak to one of our Annuity Specialists who will run through the options with you.