How your postcode affects your income

21st December 2011

When it comes to determining your annuity income there are a number of factors which can influence how much money you receive. Although health and age are often considered as some of the major factors – a healthier and younger person is more likely to receive a lower income compared to someone who may be older and  have poor lifestyle habits – there are also many other influences on your final income amount. Another   factor that influences this income amount is the area that you live in and your postcode can really make a difference to your final income amount.

The “postcode lottery”

Many people refer to it as the “postcode lottery”, but in many situations your income amount can differ substantially depending on the postcode where you live and   the average life expectancy of a person in that area. Although it may be hard to justify why there is such a discrepancy, in many areas it can be a difference of up to 13 years and this can make quite a difference to your annuity income. A person living in a wealthy area of West London for example might have a much higher life expectancy compared to a person living in a different area, and this can reflect heavily on their income.

How is my annuity income determined by where I live?

Your annuity income is generally determined on how long you are expected to live after you have started to receive your income. In general, if you are believed to have a long and healthy life your income will be lower as it’s expected that you will receive it for a longer time than a person who may suffer from many health issues and therefore have a generally lower life expectancy.

This system operates the same way when it comes to your postcode. If the average life expectancy in your area is higher then you will generally get a lower income as you are expected to be receiving it for a longer period of time. This concept can work in the opposite way if you live in an area where there is a generally low life expectancy then you may receive a higher annuity income.

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