When it comes to retirement, money is often at the forefront of many people’s considerations. How you are going to support yourself in the near future as well as for the rest of your life is quite an important consideration and you want to know that you are investing your money in the best way possible.
When it comes to retirement age, many people take out an annuity as a form of consistent income for the rest of their life. An annuity pays a regular income each year for the remaining lifespan of the annuitant, right up until the day that they die.
Why do people choose to take out an annuity?
When it comes to taking out an annuity, many people choose to do it for a whole range of different options. Many people like the guaranteed income that an annuity provides – the knowledge that they will be receiving money for the remainder of their lives. In addition, when you take out an annuity you are often eligible to take a 25% lump sum from your pension pot upon application tax free.,
What factors affect my annuity income?
Not all annuities are the same, and the individual income amounts generally differ from person to person depending on their circumstances. Some of the factors which influence annuity rates include:
- Location – where you live can have an impact on your annuity rate
- Age – the older you are the higher your income is likely to be
- Health – the current state of your health care have a direct impact on your income amount
- Lifestyle habits – if you have any poor lifestyle habits such as heavy drinking or smoking this can lead to a higher annuity rate.
It’s important to remember that annuity companies work on the principle that they will be paying you an income until the day that you die. So income rates are generally determined on how long they predict that your life expectancy will be – the longer the life expectancy, the lower the annuity income rate will generally be.