After a period in the doldrums, the annuity market has roared back to life off the back of base interest rate increases and soaring gilt yields.
And today’s rate hold from the Bank of England will only continue to contribute to a sustained period of success.
The latest data from HL’s annuity search engine shows a 65-year-old living in an average postcode with a £100,000 pension can currently get up to £7,900 per year from a single life level annuity with a five-year guarantee paid monthly in advance.
While incomes haven’t continued to rise at the rate they did a couple of years ago, the market is still delivering real value for retirees on the hunt for a guaranteed income.
This sense of relative calm in the market could well prove to be a catalyst for even more retirees to take the plunge.
Many might have held back in the hope of further increases, but could decide that now’s the time to secure a guaranteed income.
This article isn’t personal advice. Ask for advice if you’re not sure what’s right for you.
Remember, you can't usually access money in a pension until you're 55 (rising to 57 in 2028).
Thinking of buying an annuity? – What you need to consider
If you’re thinking of annuitising, it’s important to do your research. Especially as once you buy one, you can’t just undo it.
So, don’t just accept the first quote you’re offered.
Different providers offer different rates and taking the time to look across the market could leave you thousands of pounds better off over the course of your retirement.
It's also important to include as much information about your health and lifestyle as possible as part of your annuity application.
If you suffer from a condition like diabetes or have had a stroke, then you could qualify for an enhanced annuity which will give you an increased income.
Even including data like how much you weigh, whether you drink, or if you’ve ever smoked could mean you get more from an annuity.
You can use an annuity search engine to get a sense of what’s on offer and make sure you get the best type of annuity for your needs.
Remember, annuity quotes are only guaranteed for a limited time. Rates can also change regularly and go up or down in future
You also don’t need to annuitise all your pension at once. You can annuitise in stages as you go through retirement.
This means you can annuitise to secure your essential needs and keep the rest of your pot in income drawdown where it has the opportunity to grow – although this isn’t guaranteed.
And as you annuitise more, you have the potential to benefit from higher annuity rates as you get older.
The government’s free Pension Wise service can help if you’re over 50 and need guidance about your retirement options. You should also get personalised financial advice if you need it.