Guaranteed Annuities Are Not Always The Best Annuities

At retirement many thousands of retirees opt for guaranteed annuities thinking that because they are guaranteed they are obviously the best annuities. The simple fact is that this is strictly not true, because the guaranteed annuity provider has to pay out a benefit for the rest of the life of the annuitant at the guaranteed rate they will have to air on the side of caution, which ultimately means a lower annuity rate.

Retirees need to research the entire market and understand what other types of annuities there may be to satisfy their retirement income needs. The type of annuities that are often overlooked are:

Fixed Term Annuities
With-Profits Annuities
Asset-backed Annuities

These other types of annuities all have their own advantages and disadvantages and need to be examined and researched carefully to ensure they meet the income requirements both today and also in the future. An example might be that other types of annuities because they are not guaranteed would perhaps give a higher starting income but that income might fall in two or three years if the underlying investment performance was poor.

The fact to also remember is that people are living longer than ever before and the number of people expected to live to over one hundred years old will rise dramatically over the next decade. Retirement income no longer needs to last around ten years, it now needs to last more than twenty years and this puts a strain on income in periods of high inflation or when the cost of services rises faster than earnings.

Annuities are often seen as poor value and finding the best annuities can certainly help to offset that image, many retirees do not even know that they may even qualify for enhanced annuities which pay out much higher income to those with shorter than average life expectancy. These enhanced annuities often pay out up to forty percent more income to those with quite poor health but can pay fifteen percent even to those that smoke cigarettes.