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INDEPENDENT FINANCIAL ADVICE CENTRE
You should remember that past performance is not necessarily a guide to the future. Market and currency movements may cause the value of units, and the value derived from them, to fall as well as rise and you may get back less than you invested when you decide to sell your units. The tax treatment of investments and pensions is not guaranteed and may change in the future.
Your home is at risk if you do not keep up the payments on a mortgage
The Big DECISION
The decision is hard because it is (hopefully) a very long term one. Most of us only think relatively short term, about as far as our next Holiday or Christmas. But if you are 60 years old you could have 25 years or more to live and your choice of Annuity will determine the quality of your life for those years.
CHANGING YOUR MIND
Once your Annuity starts it is not possible to amend your decision ever . For example: - if you have chosen a non-increasing Annuity you cannot change it to an increasing one in future.
THE PROBLEM
The perfect Annuity does not exist. The highest starting income is achieved by having a Single life (an income for one person), non-increasing, (the income never increases) unprotected Annuity. (Some annuities guarantee to make payments for a minimum period of time (10 years for example) even if you die after say only two years after starting the Annuity, the annuity company would then make eight more payments to your estate, these are called protected annuities).
But how will your partner manage if you die first and the Annuity income stops. A Joint Annuity solves this problem, but this reduces your starting income quite a lot. A joint annuity can also create problems because if your partner dies first, you could have incurred an unnecessary cost.
A non-increasing Annuity also buys you less and less as the years go by and prices increase. You can solve this problem by having an increasing Annuity but this reduces your starting income still further. A joint increasing Annuity is around half the starting size of a single life non-increasing one!! That's the PROBLEM.
THE RIGHT DECISION
Buying an annuity, as you can tell from the Problem is always going to be a compromise. If you know just how long you and your partner, if you have one, are going to live and what is going to happen to prices and the stock-market in future then its easy! (Please tell us!) This Guide can only hope to point you in the right direction.
The major key to success however is your budget. Most people think they need the highest income immediately but in reality you only need sixpence more coming in than you are spending! (Mr. Micawber) This might mean you could afford to take a joint life increasing Annuity without affecting your lifestyle. Click here to print out a budget planner (One page) you could be pleasantly surprised.
Annuity Purchase
