Time to sort out my pension, Anyone used AnnuityReady ?

mark55man

jamesd said:

Micron said:

Impending retirement ...split them about 50/50 between an annuity and flexi drawdown.

If you're anywhere close to state pension age remember that deferring claiming that pays something around twice as much for your money as annuity buying, assuming fairly good health.

so with a given pot of money, you could live off the money instead of buying an annuity at 67 (for example) whilst earning additional state pension through deferment. I'm think I understand the calculation - ie if you used 40K for living (say for 4 years) your pension at the end of it would be approx £9350 (assuming you had full state pension) + 4* 5.8% =  or an extra £2172 pa pension at a cost of £40K.  Effectively buying just over £2K Annuity for £40K - remembering as well if will be a little more as the pension will have increased under triple lock before you take it.
 

Micron

mark55man said:

jamesd said:

Micron said:

Impending retirement ...split them about 50/50 between an annuity and flexi drawdown.

If you're anywhere close to state pension age remember that deferring claiming that pays something around twice as much for your money as annuity buying, assuming fairly good health.

so with a given pot of money, you could live off the money instead of buying an annuity at 67 (for example) whilst earning additional state pension through deferment. I'm think I understand the calculation - ie if you used 40K for living (say for 4 years) your pension at the end of it would be approx £9350 (assuming you had full state pension) + 4* 5.8% =  or an extra £2172 pa pension at a cost of £40K.  Effectively buying just over £2K Annuity for £40K - remembering as well if will be a little more as the pension will have increased under triple lock before you take it.
 

Just when I think I have this pension business all sorted out I get even more options to choose from, I sometimes wish that I had spent all my spare income on wine, women and song instead of paying it into a pension, it would have my decisions now much simpler.

I have been musing over the state pension deferral option but my best guesstimation is that the payback period would be about 15 years, given that my current life expectancy is about 17 years that would be cutting it a bit fine to recoup my £40k up-front outlay.

Think how upset I would be if I died just after four years of retirement having paid into the system 50 years of national insurance payments and not getting any back in state pension.

To be honest every time I look at the annuity rates I am more disappointed by the return and now I’m thinking of putting 100% of my pension pot into flexi drawdown.

mark55man

so I think in this instance you have 2 things to evaluate
* The normal pay back period if you were just deferring the state pension without any annuity thinking
* The pay back of using money you would pay to buy an annuity to live off while you accrue deferred benefit of equivalent amount to the annuity you purchase (remembering if you died at 4 years the annuity money would be "wasted" as well  subject to (sometimes) a minimum payment period  

Thrugelmir

Micron said:

mark55man said:

jamesd said:

Micron said:

Impending retirement ...split them about 50/50 between an annuity and flexi drawdown.

If you're anywhere close to state pension age remember that deferring claiming that pays something around twice as much for your money as annuity buying, assuming fairly good health.

so with a given pot of money, you could live off the money instead of buying an annuity at 67 (for example) whilst earning additional state pension through deferment. I'm think I understand the calculation - ie if you used 40K for living (say for 4 years) your pension at the end of it would be approx £9350 (assuming you had full state pension) + 4* 5.8% =  or an extra £2172 pa pension at a cost of £40K.  Effectively buying just over £2K Annuity for £40K - remembering as well if will be a little more as the pension will have increased under triple lock before you take it.
 

To be honest every time I look at the annuity rates I am more disappointed by the return and now I’m thinking of putting 100% of my pension pot into flexi drawdown.

At least you would have certainty of a guaranteed income for life. There's nothing magical about stock market returns. Every bull market ends eventually.