If you are retirement planning in Cheshire, you may, as a pension saver, be tempted by the prospect of a guaranteed retirement income.
You may be aware that other people have benefited from good value annuities in recent years, and wondering if now is a good time to buy one yourself. With the amount of income tied to government bond yields, it may therefore make sense to act sooner rather than later.
Bond yields rose substantially after the pandemic, thanks largely to higher interest rates, which the Bank of England increased on 14 occasions between 2021 and 2023. These were held at a base 5.25% for nearly a year until the cut to 5% on August 1 of this year.
Annuity sales enjoyed a strong year in 2023, with a total of 72,200 contracts sold, representing a 34% increase on 2022, as retirees maximised higher rates. Annuity rates have continued to rise at an average of 4% since the start of this year.
While you may be tempted to move fast, it is always worth getting sound financial advice in Cheshire first, weighing up whether annuities are right for you, given that using a pension pot to purchase one is an irreversible commitment.
There are different types of annuities on the market that can be bought at any time in retirement, with some paying a fixed sum, while others are linked to inflation. Similarly, in the event of death, consider also that some annuities pay an income to a beneficiary, while others do not.
