How can I be sure I’m choosing the right annuity?
Choosing the right annuity is a crucial part of your retirement investment and it can save you thousands of pounds in the long run if you choose to shop around a little when it comes to retirement time. Many people are nervous about making a decision on their annuity – especially as once an annuity has been chosen it can’t be changed or cancelled, so taking the time to look at your different options, and working out what benefits you might be entitled to, can really help you to reap the rewards later on.
What do I need to consider when choosing the right annuity?
There are a number of different elements that work together to determine your annuity income and these are all important considerations when it comes to making the right choice about your potential annuity purchase, these include:
- Health – your annuity income will generally depend on your life expectancy. If your health is good then you will generally have a higher life expectancy which could lower your annuity income and you may need to take this into consideration
- Age – generally the older that you are the higher your annuity income will be as it will lower your life expectancy
- Location – where you live can have a direct impact on your life expectancy and as such, your annuity income
- Lifestyle habits – if you are a smoker, heavy drinker, or have any other lifestyle habits which may cause your life expectancy to change then you could receive an altered annuity income as a result.
What are enhanced annuities and other benefits that might be available to me?
The Open Market Option allows you to shop around for different annuity options which might suit you, it also means that you no longer have to continue on with your existing pension provider when it comes to choosing an annuity. This allows you to really explore the market and see a range of different options which might be available to you.
If you have an existing long term illness or health condition then you may also find that there are various enhanced annuities or other options available to you, which allow you to receive an increased annuity income due to a decreased life expectancy.