Does where I live make a difference to annuity rates?

11th January 2012

When it comes to purchasing an annuity, companies take into account a whole range of considerations before they settle on an amount for your annuity income. These factors decide how much income you will receive and they include things such as age, health, lifestyle habits and your location. In general much of your retirement income is determined by market trends and generic averages within the marketplace.

When it comes to working out your retirement income, where you live can be a   factor which contributes to your income amount. Annuity incomes are based on an average life expectancy and as with any country, this can change depending on which area of you live, this is the basis for postcode annuities – the income amounts are based on how long you are expected to live, based on the average life expectancy in the area where you live. If you live in an area with a higher life expectancy then you can expect to receive a lower retirement income than if you live in an area with a lower life expectancy.

Could this be a benefit?

Postcode annuities can work in both a good and a bad way. If you are a relatively healthy person who would usually receive quite a low retirement income due to your exceptional health and quality of life, but you live in an area where there is a relatively low life expectancy then you could benefit from an increased retirement income, compared to what you would get through a traditional annuity service.

On the flip side of this if you are relatively unhealthy and would usually receive a high income through a traditional annuity scheme then you could find yourself out of pocket if you live in an area where there is a high life expectancy and a postcode annuity rate may not be the option for you.

Can I do anything about it?

When it comes to annuities you have a wide range of options so you can select an annuity plan which doesn’t depend on your postcode, rather it takes into consideration your health status and this can work in your benefit if you live in a fairly healthy area. However, if you are on the flip side of this then looking at a postcode annuity could benefit your income.

« Back to article list.