Annuity whilst still employed (age 55)

Catapult

Hi, - Is there any benefit buying an Annuity today (just turned 55) whilst I'm still in full time employment? Appreciate that the Annuity payments will be taxed at the higher rate (I'm a higher rate tax payer) but if I defer buying an Annuity for say 10 years until I'm 65 and likely retiring, that's a lot of Annuity payments missed out on. Just wondered if it was worth paying the extra tax rather than miss out on the payments altogether (if you see what I mean). The current Annuity rates don't seem to be that much better at 65 than at 55.

Ta!

dunstonh

- Is there any benefit buying an Annuity today (just turned 55) whilst I'm still in full time employment? 

Potentially, however you would be better buying it within the pension wrapper rather than outside of it.

It would require a number of assumptions and only hindsight will tell you what was best. 

 but if I defer buying an Annuity for say 10 years until I'm 65 and likely retiring, that's a lot of Annuity payments missed out on. 

But the annuity rate will be much lower if taken now because life expectancy is 10 years longer.   You also have the unknown variables of health and future gilt yields.

 Just wondered if it was worth paying the extra tax rather than miss out on the payments altogether (if you see what I mean).

You would ideally keep the annuity in the pension rather than outside of it to avoid that tax and have the income reinvested.

The current Annuity rates don't seem to be that much better at 65 than at 55.

That seems unlikely although it depends on what your definition of "much better" is.

Veteransaver

If your pension pot stays invested another 10 years though you will likely have a significantly bigger pot and can buy a bigger/ better annuity. But no one has a crystal ball!