How Do You Invest in Retirement?

dunroving

bfgun said:

@dunroving Thank you, that's very interesting and helpful. 

I asked this question because I had an idea of what I might do, but your experience and those of others, has shown me that there are many different options, as well as risks. 

For example, I didn't know that you could buy an annuity and get your capital back after a certain period.

And, as I mentioned in an earlier post, I had been under the impression that annuity rates were quite low, but I have now found that they are much higher than I imagined.

Yes, as I indicated in my post, annuities have changed a lot since I last looked at them. Like you, I also had no idea there was such a thing as a fixed term annuity, or that annuities can come with conditions such as a time guarantee (so you don't have to lose all of the capital if you die early in the case of a lifetime annuity). I'm looking at the 5-year fixed term annuity, in my case, as an opportunity to get approximately 5% return per annum while keeping the capital amount in a pension wrapper, so to speak - so at the end of the 5 years I could return the capital (maturity value) to a SIPP. Of course, if you take the maturity value as cash you would lose the pension wrapper and pay income tax on the whole lot. These are all ballpark figures of course and there are various conditions and terms you can play with - such as some sort of inflation protection (I didn't think it was worthwhile for a short 5-year fixed period).

I can recommend Money Helper as a useful place to play with their annuity tool to see how much you might get for a lifetime annuity or a fixed term annuity. 

bfgun

@dunroving Thanks for the Money Helper recommendation. 

Just had a quick look and will delve into it further.