Choosing an annuity
When it comes to retirement ages one of the most important decisions that you will make is choosing your annuity, and once this decision has been made it is a decision that will stick with you throughout the rest of your life. Annuities are not interchangeable and once you have selected one you have it for life. For this reason it’s important that you put a great deal of thought and consideration into your choice before you make a decision on what type of annuity to take out.
What do I need to take into consideration?
When it comes to choosing an annuity you need to take into consideration that your choice is for life. An annuity is not something that can be changed or altered once you have purchased it, as a result you need to make sure that you make the right decision when it comes to purchasing your annuity.
You need to consider your annuity income, your current health and age and how this might reflect accordingly on your annuity income. You need to decide if you want any optional extras such as a guarantee period, which ensures your annuity will be paid for a certain time or death benefit if you have dependants.
In addition you also need to consider if you want to take out a single life annuity or a joint life annuity and each of these come with their own additional benefits and costs.
What can affect my annuity income?
There are a number of factors which can potentially affect your annuity income and these include:
- Location – where you live can have an impact on the value of your annuity income
- Age – your age can have a big impact on your annuity income, as your annuity is very dependent on a life expectancy, the older you are generally the higher annuity income you are likely to receive
- Health – your health can be a big contributor towards your annuity income as it is a big contributor towards your life expectancy. If you are of good health then you will likely receive a lower annuity income as you will generally receive it for a longer period of time, and vice versa.
- Lifestyle habits – if you lead poor lifestyle habits such as smoking or excessive drinking then you may be eligible for a larger annuity income as once again your life expectancy is reduced as a result.