Annuity rates soar over five-month period

23 February 2017

There’s been good news this month for prospective retirees seeking a guaranteed income in retirement.

Rates have reportedly gone up for FIVE months in a row – a total increase of 13.6% since the post-Brexit record lows witnessed in September of last year*.

According to financial website FTAdviser, this five-month rise of annuity rates is the longest continuous period of growth seen in six years.

Difference in lifetime annuity rates

Thanks to the boost to rates, according to Retirement Line’s own figures, a 65-year-old male with a £100,000 pension fund could secure £5,981 a year for life.

This amount can be achieved by qualifying for an enhanced annuity. This type of annuity is available to 8 out of 10 of Retirement Line’s enquirers due to certain qualifying health and lifestyle conditions, enabling them to enjoy preferential rates due to their potentially shorter life expectancy.

His existing provider may not offer an enhanced option, meaning that if he chooses not to shop around, comparatively his income may be a lot lower. Income taken from the lowest standard conventional rate offered by a leading provider is just £4,167.

His income from the best available quote over 20 years would equate to £119,620 – a staggering £36,280 more income than the comparable standard quote.

Of course, this example is for a lifetime annuity, so the income will continue to be paid until he passes away which could be less or even more than the 20 years used in this example.

Fixed term annuity rates

The same 65-year-old male could instead purchase a fixed term annuity over a period of 5 years with his £100,000 fund, and receive £20,073 a year.

Alternatively, he could take an income of £6,000 per year over 5 years, and receive a Guaranteed Maturity Amount of £71,951 paid to him at the end of the 5-year term.

A fixed term annuity may be a good option for savers aged 55+ who require an income in later life without having to retire or commit to a lifetime annuity just yet.

Paying off the mortgage, clearing debts, making home improvements and holding out for further annuity rate increases are all possible reasons for their soaring popularity in recent years.

Certainty in annuities

Savers aged 55 can opt for a lifetime annuity or a fixed term annuity to provide either a guaranteed income for life, a cash lump sum to tide them over for a number of years, or a combination of both.

In addition to the certainty that an annuity provides, there are several options available which can help to protect your loved ones.

For instance, annuitants can choose to guarantee an income is paid to their partner or other dependent in the event of their death.

Joint life annuities are one way to do this, as are guarantee periods and value protection. Your dedicated Retirement Line specialist will be able to explain all of these options to you during your free consultation.

Speak to a specialist

If you are approaching retirement, do not miss out on your chance to secure a bigger retirement income for your money! Seeking the assistance of an annuity specialist like Retirement Line is vital.

Talk to a Retirement Line specialist about your annuity options today by calling 0800 652 1352 (or local rate mobile number 01733 307 240).

Retirement Line work on a non-advised basis, providing factual information to enable you to make your own informed decision.

*FTAdviser.com Feb 2017