How To Select The Best Pension Annuity And Enjoy Your Retirement?
Retirement is something most of us look forward to
. It's that time of life to put your feet up and take a break from work and profession. But it can only be fun when you have a regular income to support you. You can easily do this by going for a retirement annuity wherein you can convert a lump sum of your pension's cash into regular income for the time ahead.
Out of the two choices of fixed and variable annuity, fixed one is a safer option as it guarantees a fixed rate of interest giving you a predictable wage every month.
What if I have a terminal disease?
For those of you who have lifelong health problems or even terminal disease, there is a specific type of annuity known as impaired or enhanced annuity. Such an annuity is relevant for you because it doesn't convert your pension fund into regular low income for a long time. For the terminally ill, an impaired annuity offers a higher amount of regular income for a shorter duration because of their lower life expectancy.
I am not terminally ill however, have a lifelong health condition!
If you have a history of some health condition such as a heart disease or are a chain smoker etc then also your life expectancy is shorter in comparison to a healthy person. So, most annuity providers will offer you an enhanced annuity to cover for your higher cost of living but for marginally shorter time duration in comparison to a normal annuity.
I have more savings than I need. Is there a better option?
If you have a significant amount of savings exceeding more than what you'd need then you may take a little more risk and link your annuity to variables such as the stock market, property etc. Essentially working like a mutual fund but using high risk instruments, this type of annuity may give you higher income but may also fail to pay off.
Can I opt for beneficiaries too?
Most retirement annuities do offer the option of nominating a beneficiary for your funds. Such a beneficiary can withdraw even the entire amount on your behalf without any additional legal and time taking procedures usually involved with beneficiaries.
What about inflation?
Most retirement annuities do offer the option of enhancing your fund so that your payout can match if not exceed the rate of inflation. Usually this is done at a predetermined rate of interest after a given span of time.