28% of retirees are getting a lower annuity rate
Recent figures from the Institute of fiscal studies (IFS) have found that retirees are not getting the best annuity rates. The study has found that a third of those surveyed are not even looking on the open market to see if they can get better rates and just staying with their current provider and taking the default option.
People are actually underestimating how long they will live for, actuaries will come up with figures of 20 – 25 years which therefore means that an annuity rate is low as it has to accommodate for this length of time in payment. A real life example of a male 62 yr old getting £5,283 from a £100,000 pension means they have to live 19 yrs before they get their money back. 81 is not such a ripe old age and this is definitely possible, hitting 90+ will give them 50% return on their investment, a great return in todays markets.
The survey also suggested that people were disappointed with their retirement fund size, or how much it had (not)grown over the years. At retirement and starting the retirement process, retirees are finding that things aren’t what they expected, so they are naturally disappointed.
Retirees choosing the providers default option are overlooking the enhancements available for certain illnesses, which can provide up to 40% more income than a conventional annuity. It makes sense in all of these situations for the retiree to engage the services of a specialist retirement adviser such as RetireRight who can talk you through the options and help you get the most income, whether thats from an annuity or a drawdown plan or something more specialist.