You Would Expect A 5-Year-Old To Walk Down The Stairs Stress Free Retirement? Understand Those Annuities!

You are searching about You Would Expect A 5-Year-Old To Walk Down The Stairs, today we will share with you article about You Would Expect A 5-Year-Old To Walk Down The Stairs was compiled and edited by our team from many sources on the internet. Hope this article on the topic You Would Expect A 5-Year-Old To Walk Down The Stairs is useful to you.

Stress Free Retirement? Understand Those Annuities!

Wow! That was one wild party, my retirement party. I had everyone back to my house afterwards too – I really should have known better! I remember coming out of the toilet and trying to go down only to find Gerald (who is a semi-retired electrician) passed out on the stair lift. Even worse, he rewired it so that it wouldn’t stop at the top or bottom, but instead continued its tireless traversal of the stairs all evening! But I think the thing that everyone will remember from that night, other than Hillary falling into the bathroom, was the revelation that I had retired but hadn’t bought my annuity yet. The next couple of weeks were pretty stressful, I can tell you; if only I had read this – things would have been so different….

The importance of doing your homework before buying an annuity cannot be understated. If you get it wrong, they can be difficult or almost impossible to change later. That’s why it’s really important to make a fully thought-out choice to ensure you enjoy the best income possible in your old age.

What is an annuity?

You will usually buy an annuity when you retire (although this is not compulsory, there are other options available) if you have saved into a defined contribution or money purchase pension scheme to help replace some of the salary you no longer receive. An annuity provides you with a guaranteed income for the rest of your life and is usually bought with part or the full amount of a pension pot. The annuity income is then paid to you (usually monthly) and is subject to income tax just like your wages.

[If you are one of those lucky blighters who have a defined benefit or final salary pension read no more, you will not need to set up an annuity as your employer’s scheme will provide you with an income – if you are unsure whether you are on a defined benefit or final salary pension scheme you should contact your pension provider.]

As I’m sure you can imagine, there are many things to consider when purchasing your annuity:

  • As you approach the point of retirement, your pension provider will usually offer you a quote for an annuity from them. However, you have the legal right to shop (called the “open market option”); make sure you do – as with all financial products you will often find considerable variation between what different providers will offer. Your pension provider will send you a letter with the value of your fund before your retirement date – you should use this figure to compare annuity quotes with.
  • Having said that you should always shop around, you definitely shouldn’t discount what your existing supplier is offering you. Some pensions, especially older ones, offer a Guaranteed Annuity Quota (GAR). GAR (in addition to being the onomatopoeic term for the mating call given by the Lesser-Bearded Kestrel) can be quite a bit higher than those available on the open market, especially since the average income that annuities offer has dropped significantly over the last. a few years
  • Age You can buy an annuity from the age of 55; however, there is no requirement for you to actually retire when you start receiving your pension. Generally, the younger you buy your annuity, the less income it will pay because the provider assumes they will have to pay for a longer period.
  • Single or Joint? When you come to buy an annuity, you can normally set the income paid while you live (single); or, if you die before your partner, for as long as they live (union). It’s worth noting that while a joint annuity will pay less than one annuity (as at a younger age, a provider will wait to pay a joint annuity longer), your spouse/partner would not lose the annuity income in the event. that they outlive you. There is also a third option: to have a joint annuity, where the income continues to pay a reduced rate after the first death. This can strike a balance between making sure your loved ones still have income (albeit reduced) when you’re gone, but also giving a slightly higher annuity rate compared to a standard joint annuity.
  • Warranty period. Another option to consider is whether to have the payment of your annuity guaranteed for a certain period. This, confusingly enough, is different from the Guaranteed Annual Quota! A guarantee period instead refers to a minimum period during which the annuity will be paid (typically 5 or 10 years) even if you die during this time. Of course once you survive this initial guarantee term (whoops, shut up!) you will continue to receive your annuity, although your estate will not continue to receive your annuity if you pass away after this point.
  • Level/Scale annuities. You can choose an annuity to pay either a level income throughout the life of the annuity, or an increasing income that can either increase in a fixed increment (for example by 5% per year) or according to inflation. You should note that level annuities will pay a significantly higher amount in the early years (although the real value of the income could erode with inflation), while increasing annuities pay more the older you get. Although you may not consider inflation much of a factor at the moment, this can make a significant difference in the long run to your income. You can also choose a mix of level and increasing annuities, so consider all options carefully before making any decisions. Investment-linked annuities could also be an option if you’re looking to cushion the impact of inflation on your income. However, as with any investment, there are risks, so make sure you get some independent financial advice if you’re considering taking this route.
  • When you take your pension, you can take part of it (up to 25%) as a tax-free lump sum (this is also called a Pension Initial Lump Sum for those of you who like a technical term!). Remember that any money you take out of your pension will reduce the amount of income you’ll get from buying your annuity. If you are in any doubt about whether to withdraw some of this money, you should seek professional advice.
  • Another little known point worth mentioning here is the fantastically named Trivial Commutation. No this is not a now long forgotten board game where players must answer questions to get to work on time; instead it refers to a rule that will allow you to take your entire pension pot as a lump sum, as long as it is below a certain minimum threshold (currently 1% of your standard lifetime or £18,000 to you and me). There is something to be aware of here: only the first 25% is tax free, the rest will be subject to income tax.

So, what factors affect how much income my annuity pays?

Some, though by no means all, annuity providers base the amount they will pay on certain factors. These include:

  • your health If you have or have had health problems in the past, you may be eligible for an Enhanced Life Benefit. These usually pay more than standard annuities on the assumption (sorry, but here’s why) that it won’t be paid for as long. Looking at it another way, this can also be a reason not to annuitize too early if you can avoid it – if your health deteriorates later in life and you’ve already bought a standard annuity, you won’t be able to switch to an Enhanced annuity.
  • Your lifestyle. We all know that things like smoking or being overweight are not good for us. So do those careful annuitants. Some will even offer you better rates. Gerald for example has a wooden leg, weighs 30 stone and smokes 80 a day. He got such a good rate on his annuity that he had a cupboard cut out of his leg (the wooden one), in which he now keeps a bottle of Bourbon.
  • Your Occupation Some occupations can have adverse effects on your health or even life expectancy (For example, retired emu farmers tend to die younger than their non-emu farm counterparts. Apparently this is due to a pheromone secreted by the female emu that is particularly toxic if you are exposed to it for a few years).
  • Your…er…zip code! Some even decide how much you pay depending on your zip code, as average death rates differ greatly between areas, sometimes with large local variations. You’ll get particularly good rates if you live in the village of Midsomer – as John Nettles will tell you – although Life Insurance costs him a small fortune…

So, there you have it: the merry world of annuities. There is no other financial product that forces you to consider your mortality in quite the same way as an annuity. You not only have to think about the fact that one day you won’t be here, but also think about how long you might stay! That’s why it’s important to make a considered choice when choosing the best annuity for you. Fortunately though, once you have your annuity set up, you can focus on living as long as possible and trying to squeeze as much annuity out of your provider as you can!

Video about You Would Expect A 5-Year-Old To Walk Down The Stairs

You can see more content about You Would Expect A 5-Year-Old To Walk Down The Stairs on our youtube channel: Click Here

Question about You Would Expect A 5-Year-Old To Walk Down The Stairs

If you have any questions about You Would Expect A 5-Year-Old To Walk Down The Stairs, please let us know, all your questions or suggestions will help us improve in the following articles!

The article You Would Expect A 5-Year-Old To Walk Down The Stairs was compiled by me and my team from many sources. If you find the article You Would Expect A 5-Year-Old To Walk Down The Stairs helpful to you, please support the team Like or Share!

Rate Articles You Would Expect A 5-Year-Old To Walk Down The Stairs

Rate: 4-5 stars
Ratings: 6705
Views: 72092805

Search keywords You Would Expect A 5-Year-Old To Walk Down The Stairs

You Would Expect A 5-Year-Old To Walk Down The Stairs
way You Would Expect A 5-Year-Old To Walk Down The Stairs
tutorial You Would Expect A 5-Year-Old To Walk Down The Stairs
You Would Expect A 5-Year-Old To Walk Down The Stairs free
#Stress #Free #Retirement #Understand #Annuities

Source: https://ezinearticles.com/?Stress-Free-Retirement?-Understand-Those-Annuities!&id=4149441

Related Posts

default-image-feature

You Are Transporting A 3Y-Year-Old Male With A Head Injury Talking to One of Jamaica’s Most Exciting Dancer-Choreographers – Neila Ebanks

You are searching about You Are Transporting A 3Y-Year-Old Male With A Head Injury, today we will share with you article about You Are Transporting A 3Y-Year-Old…

default-image-feature

Describe An Average Day In The Life Of 10-Year-Old You. Great Dane Puppy And Dog Information

You are searching about Describe An Average Day In The Life Of 10-Year-Old You., today we will share with you article about Describe An Average Day In…

default-image-feature

You Are Seeing A 36-Month-Old Boy For His Well-Child Visit Success And Survival Tips from Nigel Marven’s Big Cat Adventure – The Miraculous Power Of Confidence

You are searching about You Are Seeing A 36-Month-Old Boy For His Well-Child Visit, today we will share with you article about You Are Seeing A 36-Month-Old…

default-image-feature

2 Year Old Wakes Up Multiple.Times At Night.For A Bottlw Healing Our Families in an Industrialized Society Through Attachment Parenting and Natural Education

You are searching about 2 Year Old Wakes Up Multiple.Times At Night.For A Bottlw, today we will share with you article about 2 Year Old Wakes Up…

default-image-feature

You Are Paying Too Much For Your Over 65-Year-Old Employees Retirement – Three Questions You Must Answer Before Taking the Plunge!

You are searching about You Are Paying Too Much For Your Over 65-Year-Old Employees, today we will share with you article about You Are Paying Too Much…

default-image-feature

14-Yr-Old Asking People To Use They Phone And For Rides Discovering and Using Your Gifts For God

You are searching about 14-Yr-Old Asking People To Use They Phone And For Rides, today we will share with you article about 14-Yr-Old Asking People To Use…