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The early bird captures the higher retirement income?
28 March 2008 12:00
Taking a pension annuity now rather than later could offer retirees an early financial bonus that would otherwise take years to recoup, according to a new report.
Buying now will secure retirees' annuities at their current level before they fall in line with the base rate over the rest of the year, Defaqto argued, while sacrificing a slightly higher annual income will nonetheless bring them several extra thousands of pounds now.
It estimated that by taking an annuity at 65 rather than 64, a typical male with a £100,000 pension pot would gain an extra £176 per year but would then have to live for an extra 41 years to make up the extra year's income of £7,234 that they would miss out on now.
Similarly, a typical woman with a £100,000 pot could rely on an extra £95 per year if she took her annuity at 60 rather than 59, but would then lose out on £6,228 now that it would take her an extra 65.6 years to accumulate.
Defaqto's Mark Ward advised that choosing the best time to take an annuity depends on a retiree's individual circumstances and expectations of future annuity levels, but is just as important as obtaining the best annuity for them from the right provider at a good price.
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