How can fixed term annuities help?
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Fixed Term Annuities enable you to make your retirement
income decisions in two or more stages, rather than buying a
lifetime annuity straight away. Firstly, you can invest in a
fixed term annuity for terms of 3-5 years up to a maximum
age of 75 and secondly, at the end of the term, you can
consider your options again when you will have a clearer
idea of your personal circumstances and financial
requirements at that time.
Why lock in for life until you have to?
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The early years of someone’s retirement are often the
‘primetime’ years. With people now living longer than ever
before, some believe that retirement can now be divided into
3 clear stages:
Active | Gardening | Care
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The ‘Active’ stage is typically the early retirement years
(60-75) when people are generally healthy and looking to
make the most of their life after full-time work with
travel, new hobbies etc. Some may even carry on working, at
least on a part-time basis.
The
‘Gardening’ phase is typically 75-85 as life starts to slow down
considerably and the ‘Care’ phase follows on as, for many, the
latter years of elderly life will require an element of part-time or
full-time personal care.
During
any one of these stages, personal circumstances can and often do
change, especially in the later years. For example:
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Health – people in their 60s are often much healthier and fitter
than those in their 70s or 80s
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Partners – unfortunately your spouse/partner may predecease you,
or vice versa
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Inheritance – many people today will inherit wealth later in
retirement from elderly parents and relatives, altering their
financial status and income needs
Under
current legislation you don’t have to buy a lifetime annuity until
age 75. If you are in your early 60s and currently in good health,
why lock yourself in to an inflexible lifetime annuity now if you
may benefit from an enhanced annuity (higher income) if you are in
poorer health later on in life? Why buy an irrevocable spouse's
pension now that you may want to change in the future? Why be stuck
with an ordinary lifetime annuity where you may lose much of your
investment if you die?
It’s
important that, whatever stage of retirement you are in, you make
the right income choice based on your personal circumstances and
financial needs. Investing in a retirement income product could well
be the biggest investment decision of your life. That is why
independent financial advice is so important.
Contact
us for a full, impartial review of your retirement needs.
What Guarantees do Fixed Term Annuities Offer?
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Fixed Term Annuities come with a number of guarantees:
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Guaranteed income up to age 75, subject to Government income
limits not being exceeded.
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Guaranteed Maturity Amount at the end of the Plan term to
reinvest in another appropriate pension products, known in
advance and not subject to investment performance risk
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Guaranteed death benefit options at outset to ensure that your
investment will not die with you. Your spouse / civil partner
can receive an income or lump sum or it may be possible to
provide a lump sum to a nominated beneficiary.
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Guaranteed future flexibility, keeping your options open and
giving you the opportunity potentially to obtain a higher income
in the future if your health has worsened during the term of
your annuity.
You
should of course bear in mind that this will not give you the
certainty provided by a lifetime annuity.
Fixed Term Annuities Example
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Here is an example of how a Fixed Term Value Protected Annuity might work in
practice with a £100,000 fund. If you are looking for an annuity
then you will doubtless remember Terry and June!
 Terry
is 60 and his wife June is 58. Terry doesn't want to lose all control
over his pension fund by buying a conventional annuity, but at the same
time doesn't want to take risks by leaving his funds invested in the
stock-market.
Mindful of the complexity of the retirement planning arena, he contacts
us as he appreciates the need for a specialist Independent Financial Adviser who is active in this area.
After completing a detailed fact-find and ascertaining just what Terry
and June want to achieve, we place a number of choices before them |
