A topic you should mull over is what you should do financially when you retire from a career, including the problem of annuities.

Plenty of people skirt round the issue of annuities because they think they don’t have the will power, information or assistance they need to make the right decision.

However, doing nothing about your retirement is just about the worse thing one can do as it could mean you end up poorer in retirement. The first thing to do is find out what is being offered from your current pension company. Once you have done this you can then work out which direction you want to head in next.

You have up to half a dozen people you could speak to about your retirement annuity. In broad terms you have the option to consult with the following…. IFA’s, annuity brokers and annuity providers. As to which one you choose, well that will all depend on…. the amount you have saved and whether you need a professional opinion. Historically, a person with a fund under the value of 8,000 GBP will not need to pay for the services of an IFA which can charge 250 pounds per hour.

If you are still not certain about who to speak to it is worth noting that a broker of annuities can offer you everything you need to do without charging a penny. This is due to the fact that they take a cut from the annuity provider when you buy an annuity. So if you choose to use an IFA you might find you are in reality paying two times due to this possibility of a commission. Another factor to also keep in your thoughts is that some but not all IFA’s fail to compare the open market properly.

You now could be wondering to yourself… why is it so crucial to shop around to get the best annuity deals? Well, the answer is very, very simple… if you fail to use the OMO option, you could lose a massive amount of income. The aggregate amount of lost money could even stretch as far as 46% of you first offer. Hardly surprising then that many people sorely regret not utilising their right to use the Open Market Option.

The main reason why retirees miss out on big increases in income is that they did not enquire about enhanced annuities. These kind of annuities are available to those who have an illness which bears an impact on how long they are likely to live. Some of the lifestyle choices which deem one eligible for this are heavy smoking and/or heavy drinking of alcohol. The medical issues often include…. Kidney problems, tachycardia and Diabetes type 1.

You only get one chance at finding the annuity on the market, as once it is bought it cannot be changed. For this reason it is imperative that you compare providers and do not except the first offer.

One final note of advice, don’t discard the fact that you do not have to pay for all annuity advice, you can use the service of an annuities broker.

About the Author

Dave Bloomsbury is an expert in the pension industry