We are all encouraged to save a percentage of our earnings to save towards out pensions when we have to finish working, but did you know that even after years of careful saving and planning for your retirement if you decide upon the incorrect annuity it will all have been fruitless?
You need to choose your annuity wisely and have the correct kind of financial advice from a reputable financial advisor to enable you to do that. When you make this decision it will affect your retirement income for the rest of your life so it is a decision that needs to be taken wisely.
The first thing that you need to be aware of is the fact that you do not have to take the annuity offered to you by your pension provider. If you decide to shop around it is more than likely that you will be able to get a much better deal. Annuities can be somewhat confusing and it can become rather bewildering especially as there are so many different choices.
In the recent economic times annuity rates have plummeted, leaving pensioners looking for the best deal that will give them the most money. Lifetime annuities are the best option if you are in a state of good health; they can be at a fixed or increasing rate and will deliver a guaranteed income for life.
An enhanced annuity can be considered by someone who has an ongoing health condition the enhanced annuity will pay out a considerable amount more than a lifetime annuity as the life expectancy of a person with an ongoing health condition is less than that of a healthy person. Financial Advisors are well versed in the different types of annuities available and should be able to help find the one that suits your circumstances. Do be aware though that if you have a current pension scheme that offers a fixed level of income or includes generous increases year on year, it may be better to stick with what you have than to change to another provider.
Annuities have been a topic of conversation for many years now, with people asking themselves should I invest in one, or should I not?
Around 20 years ago many people would have jumped at the chance at investing their money in an annuity fund as interest rates were in double figures and the sums that were guaranteed were quite substantial, but today because interest rates and inflation is so low people are tending to steer well clear of annuity funds.
“Take a fixed annuity for example,” says Geoff Alderton at the Banking Times. “This type of annuity is what many people opt for as it offers a fixed interest rate over a certain period of time, even if it is a very small interest rate. This type of annuity is ideal for those investors who do not want to take any risk with their initial investment whereas others may opt for an investment backed annuity which involves an element of risk.
Whatever type of annuity you choose to invest your money in it is vital you deal with a big named company, a company who you can trust and rely upon; though just because one company is offering a better rate than another it does not mean they are better. It is also important to remember that many pension advisors are paid on a commission only so many will do their utmost to get you to sign on the dotted line. If you are unsure about anything make sure you ask questions and if you are not happy with the answers it would be wise to look elsewhere.
It may sound obvious, but only deal with a company that is registered to handle your transactions. IF a deal sounds too good to be true it possibly is, so again make sure you shop around to find the very best company to deal with your annuity investments. After all it is yours and your family’s future you are dealing with and mistakes cannot be rectified at a later date.