If you know your options and choices, you can easily make a huge difference to your retirement plans. In fact, you can easily avoid mistakes that are common among people nearing their retirement. For example, people accept annuity deals offered by their regular insurer. Since you can obtain better deals than what you will get with your existing insurer, you don’t have to give up on this option. Similarly, some people end up selecting wrong product for their pension plan.
It is important that you know how to make key decisions when selecting your pension pot. Remember, you won’t be able to reverse your annuity once purchased. So be careful the first time and pick the best pension savings plan to live a good retired life.
Timing is important for taking the annuity deal. However, with rates on all-time low, waiting for them to improve doesn’t seem practical. There are no financial indicators pointing the possible rise in these rates. therefore, waiting for them to improve will mean that you are losing the income by waiting for rates to improve.
When it comes to choosing the right type of annuity, you will have to make a choice between guaranteed annuity and index linked annuity. A guaranteed annuity pays a fixed income already known to the annuity purchaser. On the other hand, an index linked annuity will be connected to stock market investments. This kind of annuity will increase if the returns from the stock market increase. buying this kind of annuity can be hugely beneficial if the stock market moves the right way. However, the risk can be higher when the market doesn’t move in the desired way.
When choosing between single life and joint annuity, you have to look at your dependents. If you are alone and do not have anyone to take care of, single life annuity will give you all the benefits you may need. However, if you have dependents and don’t want to leave them helpless, consider taking a joint annuity. If you die unexpectedly but you have a joint insurance, you will be leaving plenty for your dependents.
When you choose conventional contractor annuity, you do not have to worry about varying income. Since such annuity schemes fix the amount, you can easily budget and protect your dependents. However, once you choose this annuity type, you will not be able to reverse it.