Pension investment has always been a complex subject and the subject has got no easier as people approach retirement age and have decisions to make about the best way to use their assets to fund their retirement. The recent worldwide economic problems have certainly not helped with interest rates below historic levels but for those needing to make decisions those decisions have to be made in the light of present circumstances.
One thing that is certainly worth consideration is an immediate annuity and as part of the process of deciding a little research into the whole subject of annuities would be useful as would some independent financial advice. The internet is a fine source of information both to lead you to the better understanding of annuities and to the professionals who may provide that much needed advice.
It is certainly worth spending some time on this; even if general words such as retirement financial options are entered into search engines you will get a very good starting point for your research.
There is a vast range of annuities but at least some general research will probably give you sufficient information to be able to ask the questions relevant to your personal circumstances.
There is a strong argument that an immediate annuity of the type that has been around for years is the way to proceed. They are fairly straightforward and provide a lump sum and a fixed monthly amount for life. If it is an annuity for a couple it is important to take out the option that continues for the surviving partner until his or her death.
Current interest rates are of course a factor in the figures that a company will quote and that monthly figure will also depend on age. Actuaries have the task of calculating payouts based upon age and life expectancy and the amount that someone near retirement age would receive will exceed that of someone ten years younger based purely on the number of years the monthly payments are likely to be drawn.
Women are generally likely to live longer than men so the amount a woman might receive for the same investment as a man of similar age is going to be smaller per month. From the point of view of a couple investing in an immediate annuity the monthly figure will be smaller again if they are taking the option whereby the payments remain for the surviving partner. There is little likelihood that any couple would not take this option.
The reason why an annuity can provide more than other investments is that money goes into a pool. Those who unfortunately may not live very long will perhaps not get value for their investment but their money remains to support those surviving.
Other forms of investment come with no guarantee though you have to recognise that your money in an annuity is tied up. It does make sense to have other funds to cater for an emergency because you have no access to the annuity funds.
Annuities backed by solid insurance companies are perhaps the way forward but there is the option of the independent financial advice mentioned earlier to explain the pro’s and con’s of the whole subject. It is possible to invest in more than one annuity as they do perform differently and make different offers from the same set of figures.
A balance between an annuity and other investment is certainly something to consider though the lesson of recent years during which many famous financial names have collapsed or disappeared completely is a very salutary warning against gambling with retirement.