Millions thrown away in annuity income
Ignorance causes the UK’s over 55s to throw away millions in annuity income.
So claims Aviva, which is concerned that over 8.5 million people in this age group could be jeopardising their retirement income through a worrying level of ignorance about annuities.
Gaps in knowledge are illustrated by the fact that almost two-thirds of couples aged over 65 don’t take out a joint annuity.
Furthermore, research indicates that two-thirds don’t realise being overweight or a smoker increases annuity payouts.
According to the insurer’s Real Retirement Report, the average annuity pot stands at just £27,207 and average lump sum taken £4,338.
The average income derived by a women from her annuity is £99 per month and the average for a man, £151.
Women take out annuities on average aged 59, marginally earlier than men (62 years) but both start drawing an annuity significantly sooner than they have to by law.
However, if they held off purchasing an annuity for ten years to 69 and 72 respectively, they could get 32% (men) and 24% (women) more annual income.
The research also reveals that only 4% of those over 65 believe they derive an income from an annuity while 14% feel they derive an income from a personal pension and 19% from an employer pension.
Calling the statistics “shocking” Aviva says they serve to highlight the fact that most people don’t understand the role an annuity plays in retirement financing.
Category: Aviva News, Insurance News
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