Record High for Annuity Rates

Oct 27, 2022 | Pensions, Retirement

Investors looking for a safe and reliable way to grow their money may want to consider investing in an annuity. Thanks to the economic conditions, rates have skyrocketed and Annuity popularity is on an upswing.

Annuity rates have been rising steadily for the past nine months and have increased by 52%. With interest rates expected to stay low in the coming years, investing in an annuity is a great way to ensure that you will have a reliable source of income in retirement.

With inflation on a sharp rise and interest rates staying low, it is time to take advantage of these improved benefits. A benchmark annuity of £100,000) at age 65 would pay a guaranteed income of £6,873 a year, compared to £4,521 at the beginning of 2022. A benchmark £100,000 annuity tied to the RPI will now provide a starting income of £3,896, as opposed to £2,195 at the beginning of the year.

With incomes at a level we haven’t seen in more than ten years, it has been a record-breaking year for annuity rates. To find annuity rates at the same level as now, I would have to go back in time to before the 2008–2009 financial crisis. Where else might you receive close to 7% risk-free income in retirement in the current economic climate? Because annuity rates are so high, they merit more than a cursory look. With the correct guarantees and value protection measures, annuities may now compete well with drawdown due to the advantages offered. Customers should give annuities another look if they’re preparing for retirement or trying to reduce the risk in their financial portfolios.

Instead of viewing in isolation or putting all of their eggs in one basket, clients can consider employing annuities alongside drawdown. In addition to reducing the risk of your retirement journey, phasing annuity purchases can help you take advantage of higher annuity rates as you age.

You can also make sure that your wealth is safeguarded and can be passed on to loved ones by choosing the appropriate value protection.

Before making any decisions, “anyone thinking about their retirement possibilities should contact the knowledge of a specialist annuity broker or the advice of a registered financial consultant.” Whether or not you should invest in an annuity depends on your individual financial situation and goals. However, if you are looking for a safe and reliable way to grow your money, investing in an annuity is definitely worth considering.

This communication is for informational purposes only based on our understanding of current legislation and practices which are subject to change and are not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

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