Do I need to retire before I buy an annuity?
In the minds of most people retirement and annuities go hand in hand, but it’s important to note that you don’t have to be retired before you purchase an annuity. Many people see an annuity as an income source after retirement, but it can also be used to provide you with additional funds if you choose to work past the retirement age. As long as you have passed the main age criteria of 55, you are eligible to purchase an annuity.
Does my age affect an annuity?
In general, the amount of annuity income that you receive is based on your life expectancy and therefore if you take out an annuity at an earlier age you will generally receive a lower income as it’s expected that you will be receiving this annuity for a longer period of time. Waiting to take out an annuity can often mean that you will receive a higher annual annuity income as you will have a lower life expectancy.
What criteria do I need to meet?
Although you don’t have to retire before you purchase an annuity, you do need to meet a minimum age threshold which is currently 55, increased from 50 in 2010. Before this age you are not eligible to purchase an annuity or receive any income from an annuity. There are a few exceptions to this rule and if you are in particularly bad health then you could be eligible to purchase an annuity from an earlier age.
What should I consider before purchasing an annuity?
Purchasing an annuity is a big decision so there are many considerations that you will need to make, but choosing the right time to invest in an annuity can have a direct influence on how much annual annuity income you receive. You also need to consider that annuity rates change each year and therefore choosing the right time to get the best rate can be difficult. Many people choose to wait if there is a market downturn, but this is risky as there is no guarantee that the market will pick up again and annuity rates could continue to fall.