Everything You Need to Know About Annuities

Retirement finance is unknown territory for an alarming number of people in the UK, we aim to make sure that you have access to all the information you need regarding retirement finance. Whether you’re simply researching your options when it comes to financing your retirement in later life, or you’re approaching retirement and need help to find the best annuity rates on the market, our team of retirement experts at Annuities4U are here to help you every step of the way.

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What Are Annuities?

Many people believe that when you reach retirement, you’ll immediately be granted access to your private pension fund. In fact, you can take a lump sum amount of up to 25% of your total pension fund and the remainder will be used to provide a regular income for the rest of your life, in the form of an annuity.

In simple terms, an annuity allows you to convert your pension into a regular income, which can be used to fund your retirement. Just how much you will receive every month from your annuity depends on a number of factors:

The size of your pension fund: The more you paid into your pension fund throughout your working life, the more income you can expect to receive each month from your annuity.

Age: Generally speaking, the older you are, the more income you will receive from your annuity.

Health: Your annuity provider will take into account your health conditions when calculating how much your will receive. Applicants with existing health conditions might expect to receive a higher income than someone who is fit and healthy.

Lifestyle: Lifestyle is a major factor that annuity provider will consider. Whether an applicant smokes or drinks will often affect the rate of the annuity. Those who lead healthy active lives might expect to receive a lower rate, as they would be expected to live longer.

What Can You Use an Annuity For?

After having worked hard for the most part of your life, retirement is the time where you can enjoy the fruits of your labours and live life to the full. How you choose to spend your annuity income is entirely up to you – whether you want to take the full interest-free lump sum of 25% to make home improvements, to buy the car that you always wanted or to travel the world, the decision is yours.

Many people expect that during retirement, the standard of living will decrease due to the decrease in income. However, shop around to find the best annuity rates on the market and you can continue to enjoy a high standard of living.

What Guarantees Will My Annuity Provider Give Me?

Once you’ve signed the contract, you can’t change your annuity, so it’s imperative that you choose the best annuity for you. Once you’ve signed the agreement, you will then receive a guaranteed income for the rest of your life.

Exercise Your Right to Utilise the Open Market Option

It is a common misconception that your pension provider will be responsible for arranging your annuity. However, it is your right to exercise the Open Market Option. This means that you can choose any annuity provider you wish, which allows you to shop around and find the best rates for your particular circumstances.

Many people are unaware of the Open Market Option and at Annuities4U, we help people to get the most out of the Open Market Option. By using our Annuity Calculator, we’ll search the market and let you know where to find the best annuity rates for your individual circumstances.

Remember, you do not have to take an annuity with your pension provider.