'Annuities' do i wait?

dunstonh

I understand from the main site that annuities are going to finish in 2015

That is not correct. Either you have mis-read or this site is way off the mark in its understanding. Annuities are going to continue as an option just as they have been one of the possible options for a number of years now.

Ok so would you agree that if your not vey good with your finances annuities would be the best option.

An annuity provides certainty of income for life. it will not fluctuate due to investment returns. It is guaranteed. The annuity rate is typically higher than savings rates in force at the time due. People that tend to buy annuities are those that do not have the capacity to suffer investment risk which could see their income go down or people that do not like investing or people that dont want their major source of income in retirement to be potentially variable.

Annuities are not going away. They will be taken out less. Those with small pots are unlikely to use an annuity. However, many will still buy. I have several on the go now who are going with annuity as the objective best fits their needs. Of course, I have others in drawdown as that best fits their needs. The choice is made when you get there. In your 30s, dont worry about it. There will be more choices when you get there.

What if your good with your money and being able to access it early to move it somewhere to increase it, example as I've read before 'buy to let'.

What if you are not good at being a landlord? Can you afford the increased risk of a mortgaged buy to let. Especially in these days of stricter lending controls?

Would that be a good reason to wait?

Lets say you need somewhere around £500,000 in todays terms in retirement. Every day you leave it is one day less you have to hit that figure. It means the amount you need to put aside goes up and up. You are already late starting. Why delay it more?

lennyhenry84

Sorry again I read the information from the main site saying not to get the annuities the pension company sells you as they give you a poor return. So I took that as it was something you had to buy into with the pension straight away..............I now understand that's not the case.

Thanks again.

Final request if that's ok, any info on charges to look out for with pensions?

yangptangkipperbang

lennyhenry84 wrote: »

I wouldn't want sign into something I can't ever change

.....that is the great advantage of annuity - they can't change it either !

You will know from day 1 what you are going to get. If you use your pension pot for most of the new options that are available, what you will get will depend on a myriad of factors, all outside of your control.

jem16

lennyhenry84 wrote: »

Final request if that's ok, any info on charges to look out for with pensions?

You need to decide on how you want to invest before you consider charges. If you want to DIY look at Cavendish Online. If you have no idea then see an IFA.

dunstonh

lennyhenry84 wrote: »

Sorry again I read the information from the main site saying not to get the annuities the pension company sells you as they give you a poor return. So I took that as it was something you had to buy into with the pension straight away..............I now understand that's not the case.

Thanks again.

The open market option has existed for decades which involves shopping around for an annuity instead of using the in-house option. i.e. you go for whatever gives you the best income.

Thrugelmir

Your priority at the moment should be to start saving. As the majority of the return you will make ultimately will come from the compounding effect of reinvesting income. There's no need to take a high risk strategy initially. Like walking into a bookmakers only stake what you can afford to lose.

Annie1960

lennyhenry84 wrote: »

Sorry again I read the information from the main site saying not to get the annuities the pension company sells you as they give you a poor return. So I took that as it was something you had to buy into with the pension straight away..............I now understand that's not the case.

Thanks again.

Final request if that's ok, any info on charges to look out for with pensions?

Hi LH84

It's clear from your posts that finance and pensions is not your area. I think in your case it really would be worthwhile seeing an IFA who can go through it all with you.

Ultimately, it comes down to your appetite for risk. An IFA will ask you to fill in a questionnaire so they can find out about your risk profile and they can make suggestions tailored to your circumstances.

Pensions are a really important issue if you want to have a comfortable old age, so it really is worthwhile spending some time taking advice. The sooner you start the better.

How long did you take choosing your last mobile phone? I know I went into several shops and spent a few months trying to understand them before I signed up to my last contract. A pension is a much more expensive and important purchase than a phone, so if you have no experience I think you would do yourself a favour by making an appointment with an IFA.

atush

But at 30 dont go for too low of a risk as you wil have over 25 maybe 30 years or more for it to grow.

So, remember one important (and easy ) thing. 80 into a pension becomes 100 overnight. So, you'd have to lose more than 20% (which is a huge loss) before you lost any of your own money.

On top of that, you are investing into a pension monthly. So each month you buy x units. but if they units went down in value (ie the market went down), you'd get more units each month ie x+y units.

So stop dithering and start a pension.

jem16

atush wrote: »

So, remember one important (and easy ) thing. 80 into a pension becomes 100 overnight. So, you'd have to lose more than 20% (which is a huge loss) before you lost any of your own money.

Not so sure I would agree with that atush. The money is still yours as it's your tax relief - money that you could end up paying 20% tax on.

As to a 20% loss being a huge loss, you could easily see a 40% loss with high risk equities. Yes start a pension but don't just jump in with high risk choices.

Annie1960

atush wrote: »

But at 30 dont go for too low of a risk as you wil have over 25 maybe 30 years or more for it to grow.

So, remember one important (and easy ) thing. 80 into a pension becomes 100 overnight. So, you'd have to lose more than 20% (which is a huge loss) before you lost any of your own money.

On top of that, you are investing into a pension monthly. So each month you buy x units. but if they units went down in value (ie the market went down), you'd get more units each month ie x+y units.

So stop dithering and start a pension.

I agree.

Apparently my message is too short so I have to add more to make it at least 10 characters. There, that should do it.