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For nearly two decades, Davenport Thomas’s highly experienced team has worked closely with numerous accountancy practices to support their clients with a wide range of financial planning needs.

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Annuities prove to be a popular choice once more

19th Dec 2023
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For nearly two decades, Davenport Thomas’s highly experienced team has worked closely with numerous accountancy practices to support their clients with a wide range of financial planning needs.

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After years of exceedingly low interest rates, annuities have seen a significant increase in popularity recently, due to an increase in the rates available. For many individuals they may now be a more attractive option than pension drawdown.

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A crucial concern for retirees is the fear of outliving their savings. This is why many people look to either bonds or annuities to provide a consistent, stable income stream.  Each route provides income in a different way and is structured to achieve a different outcome.  The aim of an annuity is to provide a regular payout, helping to ease financial worries and allow for a comfortable retirement lifestyle.

To address the concern of an annuity stopping on death, you can choose for your income to be guaranteed for a minimum period. Guarantees were historically for five or ten years, but it’s now possible to guarantee the income for 20 or 30 years. This means if you die before the end of your guarantee period, the remaining payments left under the guarantee will be paid to your estate.

Annuities work for you

For those in less-than-optimal health, enhanced annuities present an additional advantage by considering the individual's health condition, which may result in a higher payout than a standard annuity. So, individuals with health challenges may be able to secure a more substantial income to cover medical expenses or enhance their overall quality of life during retirement. Annuities are unlike life cover, which penalises you for having existing medical conditions such as diabetes or high cholesterol.

Not for everyone, but worth consideration

Annuities won’t be suitable for everyone, but if you have clients aged over 65 who are retired or considering their retirement options, annuities can be a reliable financial tool to provide stability and predictability in retirement income.

Advice and guidance in this area is important to ensure clients are informed about what retirement solution best suits their needs. Ninety percent of our client appointments are now via Zoom/Teams which means we can help anyone in the UK. This enables us to provide clients with a professional financial advice service within an ethical and transparent charging structure.

For a discussion about annuities, how we can work together, or if you have any suggestions for future content for our Insights, you can book directly into my diary, drop me an email, or give me a call.

[email protected]

Contact number – 0208 6182077

https://calendly.com/richard-dtapp

 

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Once you buy an annuity, you cannot change your mind or switch to another product. You will lose access to your pension pot and any potential growth