5.4 Income = outcome

Witty hill of beans reference

Chapter Overview
Outliving your income stream isn’t funny. It’s time to talk about annuities again

Immediate Annuity
This is the regular type we discussed earlier. I played around with the numbers a bit more and the older you are when setting up the annuity, the more attractive the income you get.  It also helps if you’re in poor health and are likely to die young for whatever reason.  I guess that this kind of thing might have a place at some point in the far, far distant future for us.

Deferred Annuity
There’s a good explanation of deferred annuities here and it seems that they are available in the UK.

One thing I really like about the SharingPensions web site is their easy analysis of the costs associate with various annuity options.

annuity costs

So, you want a joint annuity where your surviving partner continues to receive the same annuity payment?  That increases the annuity cost by 1% – and decreases the annuity payment by the same amount.

You want the annuity payment to be linked to the retail price index (index linked) – that’ll cost you an extra 2.57% ..

Clearly, annuities need to be very carefully evaluated because there’s no changing them (currently) once you sign on the dotted line.

Longevity Insurance
Judging by this December 2014 article, this isn’t available as a product yet in the UK.  I guess as our population of retirees grows and we live longer, this will be an inevitable addition to the stuff we’ll need to evaluate and make sense of with our old and addled brains ..

Fixed Indexed Annuities
I couldn’t find any UK mention of this kind of product, so I guess we’re lagging the US a bit.  While the book waxes lyrical about the pros of this kind of an insurance policy, this WSJ article seems to offer a more balanced perspective, as does this one.

AdvisorsExcel & Lifetimeincome.com
I couldn’t find any UK equivalent of this online purveyor of the above kind of annuity.

The lifetimeincome.com web site is pretty simple and US-specific. It just gives a ballpark annuity quote and an invitation to be contacted by their equivalent of an IFA.