How Long to Leave it before buying an annuity

richardlionheart

What to do if original plans were to retire around now ?

on the bbc web this link had something of interest.
http://news.bbc.co.uk/1/hi/business/7663139.stm

it contains this paragraph.

The latest you can leave it to buy an annuity is the age of 75. The government says it may consider a temporary suspension of this deadline so people of that age can wait for their funds to recover.

as they keep saying the term "in these unpresidented times "
surely they can set up some kind of bond to help those who hit 70+ perhaps ?
as ...wait ..... how long !! ?

Rich

Day_Trader

Depends.
Where are you invested (ie cash, equities)?
Have you lost a lot recently?
What is your income requirement?

Thing is if you can meet your income need then you needn't worry too much.
What would the OMO (open market option) quote you for an annuity?
Best thing to do is give someone like Hargreaves Lansdown a call and ask to get an annuity quote (as they effectively search the market).

ManAtHome

Must be a very very small number of people who've left their funds in equities until the last minute. As to whether you should have to buy an annuity at 75... another question, but hardly a shock/horror kinda surprise.

dunstonh

surely they can set up some kind of bond to help those who hit 70+ perhaps ?

That option already exists under current rules so no need to make any changes.

However, leaving your money invested whilst you draw an income once you are getting closer to 75 is a risk. Some accept the risk but many dont. You have to weigh up the pros and cons and decide if the risk is too much for you vs the pros and cons of the different options.

A lot of people coming up to retirement have pensions that automatically reduce the equity content as you get closer. However, these tend not to be the case with legacy pension contracts or if you chose your own investment funds. Also, those with active servicing from an IFA would expect the annual review to include a risk reduction as you get closer. Its really only if you had an "invest and forget" style approach (or legacy contract) that you are probably still in equities right up to the last minute.