Doncaster, Yorkshire (PRWEB UK) 6 September 2013
Retirees who put off purchasing an annuity for as little as two years, may have to wait up to 41 years to recoup the lost pension income, according to new figures. Although delaying would mean receiving a higher yearly income because the saver is older, MGM calculates that annuity rates would need to rise by at least 6% from today's levels for the total retirement income to break even.
To illustrate how a delay can affect future wealth, take the example of a 65-year-old with £100,000 pension pot. This could enable him to draw an income of £5,901 today if he was to purchase an annuity, says MGM Advantage. Meanwhile, a 67-year-old with the same pension could get a better income of £6,165. While this is an increase of £264 a year, it would take the 65-year-old around 44 years to recoup the income he will have lost by delaying buying an annuity for two years, which is £11,802.
There are other options available rather than simply waiting for the unlikely event of a substantial rise in rates. These include fixed term annuities, investment linked annuities and income drawdown. All of these provide an income from your pension fund, something that won't happen if you just delay the purchase for two years, while still leaving varying degrees of flexibility to maneuverer around the changing rates. Scott Mullen from My Pension Expert said, "The important thing to remember when purchasing an annuity is to seek expert advice. Through searching the open market and personally tailoring the annuity to the individual, it enables the consumer to secure the best possible rate. In some cases increasing income by as much as 46%. That could mean the difference between spending retirement in comfort or struggling to make ends meet."
My Pension Expert is a company of Diploma Qualified Financial Advisors specialising in options at retirement.