This topic contains 10 replies, has 10 voices, and was last updated by  howard 4 weeks, 1 day ago.

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  • #1345

    sar
    Participant

    Has anyone got experience and advice in buying an annuity? I realise there are lots of factors involved. One particular thought……if I am able to, how compelling is the case for delaying the purchase for say, 5 years? Also, how much care should I put into finding a good adviser given that I will probably be happy with a straightforward lifetime annuity. Thanks.

    #1346

    sammy
    Participant

    My experience with annuities was not a happy one.
    I’d rather not divulge the actual amounts involved but it would have taken me 25 years to receive from my annuity what I had contributed.
    Luckily the new pension arrangements allowed me to extract most of my contributions without paying too much tax.
    I wouldn’t recommend an annuity.
    Better having the cash under your mattress.

    #1347

    troll
    Participant

    It’s terrifying how small an annual payment accrues from six figure savings. At the age of sixty five, 5.5% is the typical rate, delivering a meagre £5,500pa out of a £100k pot.

    A bit of basic maths shows you need to accumulate near £1m in pension savings if you want to retire on £50k pre-tax income, ie about £40k net.

    Probably worth taking up base-jumping as well as smoking as I’m sure that ups your monthlies

    #1348

    Duck
    Participant

    If you can wait until you need it in 5 years time, you will be older and your health situation may be different. Rates aren’t great right now either, so deferring your decision might be wise if you can afford to do so.

    Annuities are a great option for some people, particularly if you are risk averse and/or want to secure a level of income guaranteed for life, perhaps to cover essential expenditure without worrying if it will run out.

    I am not a financial advisor and a good one is probably worth paying for, depending on the size of your pot.

    Hope this helps

    #1349

    Mick
    Participant

    @sammy Cash under your mattress does not keep pace with inflation and the tempration is there to spend spend in the early years thinking you’ll never live to 80. At 80 you are not going to be able to earn. If you can now, defer accessing your pension fund unless you are in really poor health.

    #1350

    bill
    Participant

    Annuities worked well for my mum and dad especially for my dad who lived longer than expected.

    Shop around and ask questions.

    The big advantage is that you know what you are getting compared with say a draw down pension.

    I suspect most people will have a mixture of the two if they are sensible.

    #1351

    Mick
    Participant

    The main problems are not knowing how long you’ll live and how many years of activity you have left.
    While life expectancy might be increasing there are statistics that show that something like 50% of any years lived after the age of 65 will be affected by a disability.

    https://www.ons.gov.uk/file?uri=/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/datasets/disabilityfreelifeexpectancydfleandlifeexpectancyleatage65byregionengland/2006to20082007to20092008to20102009to20112010to20122011to2013and2012to2014/regionsat65.xls

    So you might live till your 85 just don’t expect to be able to do all the things you want.
    So while saving your money might sound like a good idea it might be better to spend it.
    Especially as the present regulations don’t encourage and in many cases actually penalise savers.

    #1352

    Adam
    Participant

    Speak to an independent financial advisor before committing to anything.

    he government have free advisor appointments to explain this and much more. You can book one here (and thank me later):

    https://www.pensionwise.gov.uk/en

    In brief on your questions:
    – you can buy it whenever you want; it’s your money. Broadly, the longer you leave it, the higher the payment.
    – “compelling” is in the eye (and individual circumstance) of the beholder. If you’ve no need for the income in the short term, and your life expectancy is vanilla normal, then delaying simply redistributes more or less the same total value over a smaller number of years.
    – Regarding advisers, how will you know “a good one”? Will you see several? Will you be able to judge their ability? All are qualified and regulated, but some are more capable than others… unfortunately those of us in most need of help are least able to genuinely identify competence.

    Therefore start with the free Government appointments – they are fully qualified and I’ve heard, by and large, good things about them. Beyond that unbiased.co.uk is a directory of accredited advisers (and keeps you clear of scammers).

    There are bigger decisions than timing – whether to take an annuity at all (or drawdown); inheritance considerations; etc. – which rely on wider financial context than just age (dependents; other income sources; health; current/future liabilities; etc.).

    #1353

    jack
    Participant

    By the time he reached his early eighties my dad was struggling to spend even his meagre state pension. Your appetite decreases, you don’t go on food and booze benders, you’re not bothered about going on expensive holidays etc.

    IMHO, depending on the size of your pension pot, you’re better drawing down more in the early years when you can enjoy it, then living on a reduced income. I don’t see the point in working all those years just to save up to pay for the last miserable few years of life.

    #1354

    jumpingjack
    Participant

    my mother, 70, is taking a modest risk spending more while she is still relatively mobile. I have an aunt who has declined rapidly in the less than a couple of years with Alzheimers. The adage of enjoy your health while you have it seems true.

    #1355

    howard
    Participant

    without knowing the OP’s details (age, health, family, other assets etc.) it’s impossible to advise him. If, say, only 55 with a pot of £100k, I would work more if I could, even if part time.

    FWIW my dad is still healthy at age 83 and a life long smoker. Still enjoys treating his grandkids and has no trouble spending (house repairs, car fixing etc.) He never expected to be in good health at that age. For every anecdote there is a counter anecdote.

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