What is a Lifetime Annuity?
Essentially, a lifetime annuity is a means of converting your pension fund into an income that is guaranteed for the rest of your life. In exchange for your pension fund you will receive a regular payment (either monthly, quarterly, twice a year or yearly) from your annuity provider. The amount of money you receive will depend upon a number of things, including:-
– The size of your fund
– Your gender
– Any pre-existing health conditions
A specific type of lifetime annuity is affixed annuity. Fixed annuities offer a set regular income and this does not change over the course of your retirement.
Fixed annuities have their advantages and disadvantages of course. In having a fixed annuity, you know exactly what income you will receive and when, which makes financial planning quite simple. However, what it also means is that as interest rates rise, your income stays the same. Money is worth less and less over time and inflation means you get less from the same amount over a number of years. However, with fixed annuities, your income will not rise in line with this and this can be a downside.
We’re happy to advise on all types of annuities and other retirement income solutions. Get in touch with us today!