Flat vs Indexed Annuity; front loading income?

MK62

In the end, it's a personal decision........with index linked, you get the certainty of constant spending power over your lifetime, but the initial lower payout might mean living the first part of your retirement on a lower income than desired, while gradually transitioning to perhaps having more income than you really need later in life.........but only you can decide on the priority here.
You also need to consider your tax position, and whether you need to consider spousal provision as well. 

Remember too that none of these approaches are mutually exclusive.......you can fund retirement from any mixture of SP,  DB pension, DC pension drawdown, level annuities, index linked annuities, plus other non-pension assets (ISAs, cash etc).......

westv

DRS1 said:

KeiserSoze said:

Albermarle said:

westv said:

3% for a RPI seems a bit low.
I'm sure I saw 4% (50% spouse, 15 yr guarantee) and 3.8% (100% spouse) when I last perused the rates. I'm 62 though. From memory, the same level annuities were 6.5% and 6% roughly

I think the OP was actually referring to annuities that increase by a fixed 3% every year.

Yeah exactly, the rate I was looking at had a fixed 3% annual indexation 

and there you go again confusing an increase with indexation.

Which is probably why I made the mistake of thinking the 3% in the original post related to the annuity rate rather than the annual increase.

KeiserSoze

MK62 said:

In the end, it's a personal decision........with index linked, you get the certainty of constant spending power over your lifetime, but the initial lower payout might mean living the first part of your retirement on a lower income than desired, while gradually transitioning to perhaps having more income than you really need later in life.........but only you can decide on the priority here.
You also need to consider your tax position, and whether you need to consider spousal provision as well. 

Remember too that none of these approaches are mutually exclusive.......you can fund retirement from any mixture of SP,  DB pension, DC pension drawdown, level annuities, index linked annuities, plus other non-pension assets (ISAs, cash etc).......

Yeah that's a fair point. I do have small DBs and a S&S ISA too, plus with the SP a decent portion of my retirement income will be protected from inflation to some extent. 

I didn't think of potentially having 2 annuities either; one flat and one with a set increase, so that's an option I'll also consider. I quite like it as that'll give me more up front (when I will probably spend more) but I can tailor it to keep me under the tax allowance until my SP kicks in. 

Cheers!