Annuities are useful financial tools for those planning for their retirements. With annuities you will be able to purchase an income for life once you have finished working. This can be a very practical way to ensure you have money to live from when you no longer have an income from your career.
What is an Annuity?
During your working life you should be saving up for your retirement with a good pension plan. Once you do retire you will have a pot of money which you can then use to cover your non-working years.
Basically you will be able transform the bulk of your pension fund into an annuity. You will have until you are 75 years old to do this.
The remaining money you can take as a lump sum (tax-free) when you retire that you can do what you like with.
Annuities are sold by most of the main insurance companies. This is a type of insurance policy. You will hand over your lump sum and the insurer will guarantee you an income for life.
There are many very competitive annuity deals on the market and with the right advice you could find annuities that could significantly enhance your pension fund.
Some companies will offer annuities that will increase by a certain percentage each year in line with rising costs of living (based on the RPI).
These are known as escalating annuities and can help you to make the most of your pension fund and ensure it offers you enough to live off of into your old age.
You can also get annuities that offer the same annual payments every year until you die. These are known as level annuities and can provide you with peace of mind as you will know exactly what you will get each year.
Joint annuity products are available if you want to ensure the policy continues to pay out to your partner if you were to die.
Annuities are available on the open market. This means you do not have to use the same provider as you already have your pension fund with.
This gives retirees the chance to shop around and compare deals until they find the right annuities for their needs.
Annuities can help you to plan for the kind of retirement you have always looked forward to. With these financial products you can guarantee an income for life once you have finished work.