Despite the level of inflation dropping to almost a 3 year low, the increase in the cost of food and fuel show no signs of abating – this is of particular concern for pensioners or those individuals approaching retirement, who surveys show, will typically spend a higher proportion of their income on household heating bills and other daily essentials.
Couple this with the fact that individuals are now getting less income from their pension pots due to continuing low gilt rates (the index, which is used to determine the underlying rate of pension annuity plans) and it is not a surprise that many reaching their planned retirement ages (typically 65+) is deciding to extend their working years as retirement is now being viewed as an unaffordable option.
With accrued pension pots being most individual’s largest financial assets, after their homes, for those approaching or considering retirement now has never been a more important time to consider the options available in securing an income and looking at the most effective ways of enhancing this income.
Whilst there are various options available to retirees in securing pension incomes the majority of individuals prefer to secure a guaranteed/fixed amount of income for life at outset in return for their pension pot in the form of a lifetime annuity.
So, assuming a pension annuity is for you, here are a few helpful tips on how to make the most of you securing that income:
- Firstly, make sure the annuity you are securing is arranged in line with your needs and objectives– a single life annuity will receive the highest rate since no provision is being made for an income for any spouse or dependent upon death.
- If you are married or have dependents decide if you wish to make provision for these on your death via a Joint Life Annuity – this provides a proportion of income for the dependent, usually a percentage of the income received by you, upon your death.
- Shop around – providers rate vary enormously therefore it can pay to shop around. Surveys show that some providers annuity rates can vary by up to 10% – don’t lose out!
- Do not assume that your current pension provider automatically offers you the best rate, they may perceive you to be a captive customer, and this could mean that you potentially lose out on thousands of pounds per year
- Include any health conditions or medical history – unlike travel and life insurance factoring in on-going health conditions, medical history and/or lifestyle factors can increase the level of income you receive via an Enhanced or Impaired Annuity, it can potentially increase income levels by 50% when compared with standard rates. Some examples of these range from smoking, high blood pressure/cholesterol, diabetes through to more sever illness such as cancer, heart problems to list a few.
- Seek Independent Impartial Advice – this will ensure that your retirement needs and objectives are fully addressed and that you receive the most suitable product to match these objectives.
Should you be retiring within the next 6 months and wish to discuss your retirement options further please contact us.