Over 50's club

1 lurker | 324 watchers

Velociraptor Jun 2021 10:04am, 2 Jun 2021 52,882 posts	0 Velociraptor I'd buy an annuity if I smoked, had a hideous family history of dying early from something, but had secret knowledge that I'd live to 150. And I suppose they have their place if you have a SIPP but no interest in managing money.
GregP Jun 2021 10:07am, 2 Jun 2021 127,082 posts	0 GregP That first sentence is brilliant. Thanks V'rap. As I understand it, if I retire at 63 I need to live to 103 to break even. That can't be right though, surely?
Velociraptor Jun 2021 10:14am, 2 Jun 2021 52,883 posts	0 Velociraptor I've had a wee google, but I can't see any way of getting a ball park annuity estimate without divulging my email address. Which is OK because I'm just being nosy and have no intention of actually buying one. I can remember a point in the recent past where drawdown rules were changed in a way that made buying an annuity no longer an obvious choice for me.
Velociraptor Jun 2021 10:18am, 2 Jun 2021 52,884 posts	0 Velociraptor That could be right, Greg. I remember something similar from back in the days when I wrote simple financial articles for the GP trade press. Insurance companies aren't in the business out of altruism. I can see a place for annuities, but the pension pot of a healthy young retiree who's not scared of drawdown is not that place.
um Jun 2021 10:21am, 2 Jun 2021 4,777 posts	0 um There's a summary here (fairly neutral, I think) moneyfacts.co.uk But I think v'rap has it right - you need a 'published' life expectancy of a few years, but ecretly know you'll live for ever. The figures I got when I last looked (ie my financial advisor) weren't good for annuities. When I say 'weren't good', I mean not worth 10 secs consideration. Unless - maybe - there may be something in it if you're lucky enough to be over the lifetime allowance to 'avoid' higher rates of tax? or to offload a lump sum? Or you want to max out your lifestyle & leave nothing to rellies.
B Rubble Jun 2021 10:27am, 2 Jun 2021 2,770 posts	0 B Rubble It's about 4%. There is a way you can check how much you would get at: pensionwise.gov.uk If you use a £500,000 pension pot to buy an annuity, you could get: £125,000 tax free and get: £15,700 guaranteed annual taxable income, for the rest of your life This estimate is for a single-life non-escalating annuity. You may wish to choose a joint-life annuity that pays your spouse or partner after you die, or an enhanced annuity which pays more if you smoke or have a medical condition.
GregP Jun 2021 10:33am, 2 Jun 2021 127,088 posts	0 GregP so 24 years? Retiring at 63 I'd need to live to 87? Unlikely, but not impossible. My dad lived to 90 but my mum died in her seventies and I have a past that involves strong liquor. Plus, as I understand these things, I'd 'need', or at least 'want' more than the median amount in my sixties and less in my eighties?
Velociraptor Jun 2021 10:34am, 2 Jun 2021 52,885 posts	0 Velociraptor Thanks, B Rubble. That's a useful link.
GregP Jun 2021 10:34am, 2 Jun 2021 127,090 posts	0 GregP Yes, what she said, also.
Nick Cook Jun 2021 10:39am, 2 Jun 2021 35,227 posts	0 Nick Cook When I consolidated my pension pots a few years back, the advisor recommended a scheme and said, " This can easily be converted to a drawdown account when the time comes. You won't want an annuity will you?".