Small Annuity - Index linked on not index linked.

xylophone

Neither of us are drawing the State Pension yet.

If not deferred, have you both obtained state pension forecasts?

https://www.gov.uk/check-state-pension

Cheviot55

Yes we have both checked our State Pension forecasts.


Which would you choose (1) or (2)?

xylophone

You could live into your mid nineties as could your wife- particularly if your wife is younger, the index linked could be the safer option.

bowlhead99

Cheviot55 wrote: »

Yes we have both checked our State Pension forecasts.


Which would you choose (1) or (2)?

I would take the inflation linked option because on average a 60 year old in average health will live another quarter century or so, which is probably enough to 'break even' on starting off with a lower value and having it increase with inflation. So it's not really a losing option.

The real value from the inflation linked option will be if/when you live longer than average. You could live four decades or more from now. If you live a long time, it's great to have the inflation linked product as an insurance policy against living a long time. If you don't live a long time, (a) you'll be dead and won't care and (b) your spouse has an inflation linked income which starts off a bit worse but when they're 80+, 90+, 100+ they'll be glad it's still going up each year rather than being stuck at the level of was at many years earlier.

Brynsam

Cheviot55 wrote: »

Yes we have both checked our State Pension forecasts.


Which would you choose (1) or (2)?

What I would choose isn't relevant to you unless we have similar attitudes to what inflation is likely to be, risk, health... What are you trying to achieve?

Cheviot55

Thanks to those who have provided me with their answers to (1) and (2) so far - Can anyone else provide an answer to (1) and (2) ?

kinger101

Cheviot55 wrote: »

Thanks to those who have provided me with their answers to (1) and (2) so far - Can anyone else provide an answer to (1) and (2) ?

Your wife perhaps?