Capitalise on your pension-income options to help you achieve the best possible pension income.
Over a year on from the pension reforms, you may be thinking about how to get the most from your pension savings to help fund your retirement.
Historically, a pension annuity has been the most popular option used by those approaching retirement. Although other options are now available, an annuity is still the only way to turn your pension savings into a regular, guaranteed income for life, for you and, if required, a spouse. The income you will receive can be confirmed upfront and will continue to be paid to you, regardless of how long you live.
Often, the longer you live, the more value you are likely to get from an annuity. Many people choose an annuity for the peace of mind that comes with knowing that your pension income won't run out before you pass away.
There are also a number of choices you can choose to make when buying an annuity that can impact the amount of income you could receive, including;
- Whether you'd like your income to continue for a partner if you were to pass away first
- If you'd like to protect your fund for any beneficiaries in case you pass away after purchasing your annuity
- Whether you'd want your income to increase over time to protect you against inflation and the rising cost of living
Though not an exhaustive list by any means, some examples of conditions or factors that may qualify you for an enhanced annuity are:
- High blood Pressure
- Heart disease
- Kidney Failure
However if a guaranteed level of pension income from an annuity doesn't feel like the right option for you, there are other options you may wish to consider, such as:
Pension Drawdown is considered a flexible way to access your pension savings and effectively manage your tax bill. It allows you to be in control of your fund as there are no limits to the amount that you can withdraw from your savings or when you can take it.
However drawdown can have its downsides. As pension savings remain invested, there is the potential for them to reduce in value as well as increase because there is no guarantee of investment performance meeting future income needs. This means your pension income could run out during your lifetime if you're not careful.
A fixed-term annuity provides you with a guaranteed income for a period of between 1 and 25 years through a non-advised service or up to 40 years via a Financial Advisor.
They allow you to choose the level of income you wish to receive and you'll know what fund value you'll have left at the end of your chosen term upfront. Although it's not possible to know how much income that remaining fund will secure for you in the future.
So should you shop around?
Deciding on the right pension-income option for you might seem confusing and that's why talking to an experienced specialist or financial advisor is so important. Companies like Age Partnership who are impartial and can talk you through the pros and cons of each option as we as confirming whether you would qualify for an enhanced annuity and therefore increased pension income can help take the stress and worry out of the process.
Click here to instantly calculate how much pension income you could receive >>
To find out more, visit www.agepartnership.co.uk or call Freephone 08000 810 815.
(1) Based on an enhanced lifetime annuity vs a standard lifetime annuity. Source: Money Advice Service.