Want some peace of mind that you won’t run out of money when you retire?
A guaranteed income for life, also known as an annuity, could be a good choice for you. Using your pension savings to buy a guaranteed income means you get a guaranteed amount of money every year for as long as you live.
You’ll normally be able to take 25% of your pension tax-free, and the rest can be used to buy a guaranteed income for life which will be subject to income tax.
The amount of income you get will depend on a number of things like:
- Your age
- The size of your pension pot
- Your health and lifestyle
- Whether or not you’ve chosen an option where the amount of income changes over time
You can find out a bit more about the factors that will affect your income amount from the Money Advice Service
There’s a range of options you can add. Meaning you can tailor your guaranteed income to make sure it’s right for you. Here are some of the options:
Stay in line with rising prices
By choosing a guaranteed income that moves in line with inflation you can ensure that your money stays consistent with the rising prices of goods, giving you a better chance of a comfortable retirement. Or you could choose a guaranteed income with a fixed increase, giving you certainty on how much it will increase by.
Get higher income for poor health
If you smoke, have a particular lifestyle, are on medication or have a medical condition you could qualify for a higher guaranteed income (enhanced annuity).
Provide for your loved ones
You could choose a guaranteed income that allows you to provide for your partner, dependent or other nominated beneficiary after you die. This normally gives you a lower level of income as it's designed to pay out for longer.
Guaranteed payments for a set period of time
You could choose a guaranteed income that has a guarantee period. This means the guaranteed income or annuity will be paid until the end of the guarantee period, even if you die before then.
Lump sum pay out
Depending on your choice of guaranteed income, a lump sum pay out could be paid when you die.
It’s important to know that adding more options will reduce your starting income and you won’t be able to change your mind later.
Not sure if a guaranteed income is right for you?
Your options at a glance
*Usually you can't pass on your guaranteed income for life, but you could add on options - for example, to pay a spouse's pension after you die, to keep paying the income for a guaranteed period, or to include value protection which provides a lump sum death benefit.
Remember to shop around
When it comes to arranging your income we would always recommend that you shop around to make sure you get the income that’s right for you. To ensure you get the highest income we have a service that can do the shopping around for you by obtaining annuity figures from all providers in the market, including providing you with a Standard Life Annuity figure. Doing this could improve your retirement income as annuity options and rates may vary between providers. You can also visit the Money Advice Service website for a free and independent guide to shopping around for your annuity.
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