Annunities: the gamble of your life

By Mike LeGassick, Independent Financial Adviser, Manning and Company
When planning your retirement, you may worry that you will outlive your income.  It’s understandable, as we’re all generally living longer and enjoying better health. 
For some, an annuity is the answer.  An annuity is an insurance product, bought on retirement with the money saved in your pension pot.  It pays you a regular sum for as long as you live.
But annunities come with a very significant risk.  You are gambling that you will live long enough to receive back as much as you paid in. 
If you die sooner than expected, your loved ones would not see any of your hard-earned money – it would go to the insurance company.   Not only would payments stop, but the capital invested would be lost too.  Die too soon, and the insurance company ‘wins’.
The good news is that annuities are not the only option; and it’s wise to consider other choices before making a decision.  You may find, for example, that drawdown, flexible drawdown, or open market options work better for you. 
Even if an annuity is the right choice for you, there are numerous products available.  Don’t automatically buy the annuity from your existing insurer, as it may not give you the best deal.
This is a decision with lifetime consequences – so take objective, independent financial advice first to make sure your money works hard for you, so you can enjoy your retirement.

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