Annuity upgrade?

Dunky62

Hi.

I have a friend in his early sixties who has never married and is looking towards retirement. He has a decent pot , 600-700k. He therefore has no dependants.  I have suggested he look at single life annuities for peace of mind.  He then asked, "what if i buy the single life annuity , but then meet the woman of my dreams and get married. What then?"

So the question is,  Can annuities be upgraded to include a spouse, obviously at the cost of  a reduced income?

DRS1

Not as far as I am aware.  They do go on about how you need to be certain this is what you want as you can't change it later.  He does not need to use all the pot to buy the annuity though - he could keep some of it back for a rainy day.

incus432

Don't think it's usually possible - the details are usually fixed when you take it out. Others may know more.

Another option may be using some of the pot to buy a fixed term annuity for say 10 years which can deliver a specified sum at the end - that could be used to buy another annuity - maybe a joint policy if he did meet and marry the WohD, or another single life otherwise. 

Or put into gilts and drawdown

Dazed_and_C0nfused

DRS1 said:

Not as far as I am aware.  They do go on about how you need to be certain this is what you want as you can't change it later.  He does not need to use all the pot to buy the annuity though - he could keep some of it back for a rainy day.

Or a gloriously sunny day with love in the air 😉

dunstonh

So the question is,  Can annuities be upgraded to include a spouse, obviously at the cost of  a reduced income?

No.  Annuities are cast in stone at the outset.  However, he can put up to 30 years guarantee on the income.

Cobbler_tone

Love the optimism of thinking about a spousal pension when you are single. Either optimism or over thinking. Chances are anyone you meet with be widowed or have a decent divorce settlement! 

I personally would only be considering my own security and enjoyment of my money.

Marcon

Dunky62 said:

Hi.

I have a friend in his early sixties who has never married and is looking towards retirement. He has a decent pot , 600-700k. He therefore has no dependants.  I have suggested he look at single life annuities for peace of mind.  He then asked, "what if i buy the single life annuity , but then meet the woman of my dreams and get married. What then?"

So the question is,  Can annuities be upgraded to include a spouse, obviously at the cost of  a reduced income?

Depends if the woman of his dreams comes with her own pension provision!

His annuity can't be changed, but there are plenty of options, in particular:

• buy a smaller annuity so he has some cash in hand to provide for her, possibly through a life insurance policy
• use flexible drawdown - the 'peace of mind' idea seems to be yours rather than his (although I think it's often a good idea, depending on other savings, attitude to risk, investment knowledge etc)
• make sure he updates his will so that she inherits everything - presumably including a property? - which should cover the situation fairly adequately, given any income from a single life annuity would only cease once he had died, depending on the guarantee period, if any, he has selected.

dunstonh

He could also switch to fixed term annuities if he is optimistic of a future relationship.   

xylophone

Has your friend obtained a state pension forecast to help with planning?

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

Dunky62

Thanks very much to everyone for your thoughts. I have forwarded them to my friend for his perusal.

Hoenir

Why annuitise the entire pot in one fell swoop?