When people think about retirement they usually think about all the activities that they love to do or all the time, they will have to go on trips and holidays. But with retirement comes a more important issue – how will you pay for all these activities and holidays?
For most of us, by the time we retire we will have built up a pension fund, but then what? Surely we can’t live the rest our lives just on this port of money?
An annuity is a way to take that pension fund and create an ongoing income out of it and essentially make the most out of that pot of money.
Depending on your individual circumstances you could boost your pension income quite significantly. There, of course, many annuity options that will apply to you and it is important to understand which ones are suitable for you; after all this is a decision that will affect the rest of your life.use link at http://www.ft.com/cms/s/0/690c8a42-b918-11e5-b151-8e15c9a029fb.html#axzz3xZDhKyiN
Most people who take out a pension annuity would go for a simple lifetime annuity. This is normally a sensible option because a lifetime annuity guarantees you an ongoing fixed income so you know what you will be getting in advance.
The two main factors that affect the quote of a lifetime annuity are:
The normal life expectancy of a person of your age who is in good health.
The interest at the time of the annuity quote
The downside to this type of annuity is that once the plan is taken out, nothing in the plan can be changed at a later date. Should the state of your health change or if the interest rate increases this will have no negative nor positive impact on your annuity rate (That is the income you receive from the annuity) If the interest rate was to go up you would not benefit from it.view more information!
An enhanced annuity, on the other hand, can take into account your health with a simple medical questionnaire and therefore if you suffer from poor health a plan that is more suited to your health would benefit you more in the long run.
There are also options to take out a temporary annuity plan where the guaranteed income last for 5 years and at the end of the 5 years that guarantee expires, however you will have a guaranteed fund that can be used to buy another annuity and if the interest rates have risen then you should benefit more with the higher interest rate.