Do you expect too much from your pension annuity
Many people approaching retirement are really in the dark over what income to expect from their pension annuity when they retire, and many have heavily inflated expectations of what they might get.
Research conducted amongst those approaching retirement showed that there is a drastic lack of preparation when it comes to retirement planning.
Around half of those in the research planning to retire within the next five years have no idea of the annuity income they will receive from their company money purchase scheme and a further third of personal pension savers are also unable to estimate how much a pension annuity will pay out. Those who can make an estimate are wildly over-optimistic.
Almost one in five who are retiring in the coming five years are expecting that their pension annuity will provide an income of more than £9,000 a year – with a £100,000 pension fund pot. Currently, this is more likely to be around £7,700 for a man aged 65, and £6,700 for a woman aged 60. Quite big differences!
Those people who are five years from retirement should be starting to think hard about their retirement income and should check out what that income will be. Experts are predicting that annuity rates will drop as interest rates drop and stock market volatility continues.
The further away from state pension age people are, the higher their expectations of the likely annuity payout from a £100,000 pension pot. The average 60-year-old man apparently expects an average income of £8,541 while the average 56-year-old woman expects an income of £8,570.
If you have time to go to retirement, start planning now. Get some annuity quotes today so you have a rough idea of what to expect, and don’t be caught out.
