08:43 24 December 2013
When you are ready to retire one of the best things you can do is to purchase an annuity. It can provide you with a solid usable income. The question is how to choose the right product for you? Many people are going to look the tried and true option but you could be losing thousands of pounds off your potential retirement income.
The first point to remember when it comes to dealing with retirement income and an annuity is the fact that once you purchase it, there is nothing you can change. You cannot change your mind later and pick a different one. There are no returns or refunds. Hence, it is important that you shop around and find the perfect fit for what you need.
In order to make sure you get the right annuity follow the following steps:
Choosing an annuity begins with having a clear understanding of what it is. Annuities are offered by insurance companies. When you retire, you take any tax-free cash that may be part of your pension fund and then give the rest over to the insurance company. The insurance company then provides you with a yearly income for the remainder of your life, no matter how long you live.
The benefit of obtaining the right annuity means that you will receive the same amount of money every year no matter what and you can even arrange for that income to increase on a yearly basis to handle increases in cost of living. The amount of money you have in your pension also has an effect on what products are available to you. This is why it is important to understand your pension and the products available when shopping around.