WHAT IS A FIXED INCOME (ANNUITY)?
A guaranteed regular income that will last for the rest of your life.
Is fixed income right for me?
Want peace of mind that you won’t run out of money when you retire? This could be a good choice for you. Use your pension savings to buy a fixed income from a provider of your choice and get money every year for as long as you live.
What are my fixed income options?
You can build in options for a retirement solution that’s right for you:
Stay in line with rising prices – By choosing a fixed income that moves in line with inflation, you can ensure that your money stays consistent with the rising prices of goods, giving you a better chance of a comfortable retirement.
Get higher income for poor health – If you smoke, have health or certain lifestyle issues, you could qualify for a higher income.
Provide for your loved ones – You could choose an annuity that allows you to provide for your partner should they outlive you (otherwise known as ‘fixed for two’).
Guaranteed payments for a set period of time – You could choose an annuity that has a guarantee period. This means the annuity will be paid until the end of the guarantee period, even if you die before then.
Lump sum payout – Depending on your choice of fixed income, a lump sum payout could be paid when you die.
Remember, adding more options will reduce your starting income, and you won’t be able to change your mind later.
What do I need to think about?
Shop around
Check whether any other provider will offer you a better deal. You don’t have to buy your annuity from the company that your pension plan is invested with. This could improve your retirement income, as annuity options and rates may vary between providers. Once you set up your annuity, you won’t be able to change providers, cash it in or add different options so you have to get the decision right first time.
Support family
If you choose ‘fixed for two’, your partner will receive payments tax-free if you die before age 75. If you die age 75 or older, payments to your partner will be subject to tax.
Cost of living
Inflation can reduce the effective value of a fixed income due to rising prices of everyday items and bills.
State benefits
Your entitlement to means-tested state benefits, if applicable, may be affected if you take cash or income from your pension – check this isn’t going to be a problem before going ahead.
What else can I do?
You have the freedom to choose how you take your pension. You can take a fixed income on its own or you can take a mix of options to find the right fit for you.
Balance of peace of mind and flexibility
You could use some of your pension savings to secure a fixed income to cover the essentials such as bills and living costs, then use the rest to cover life’s extras.
Change to a fixed income anytime
For example, you could start with a flexible income (drawdown). This would give you more flexibility in the earlier years of your retirement. Then, when you reach 75, you could buy a fixed income. This would give you a guaranteed income for the rest of your life, allowing you to relax and enjoy retirement in the knowledge that you have a secure income.
Taking a flexible income and fixed income could offer a good balance of peace of mind and the flexibility to adapt to life’s changes.
With a flexible income arrangement, at least part of your pension is actively invested, and there is a risk that if the investments don’t perform well they won’t be able to sustain your required income.
Impartial advice of the highest quality
At Independent Financial Solutions, our highly skilled adviser uses state-of-the-art technology, enabling us to meet all of our clients' financial needs, both personally and corporately, and achieve their objectives in the most cost-effective way.
This is important because there are literally thousands of different options available, and our clients want to be certain that any investment, pension, healthcare or insurance recommendations that we present for consideration are the most appropriate to their individual needs. In other words, recommendations that are totally in our clients' interests – not someone else’s.
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