One benefit of the ongoing bond market turmoil is that it has caused annuity incomes to soar.
Latest data from HL’s annuity search engine shows a 65-year-old with a £100,000 pension can now get up to £7,425 a year from a single life level annuity with a five-year guarantee.
This is up from the £7,235 a year on offer just last week and a huge increase on what you could get this time three years ago.
Remember, annuity quotes are only guaranteed for a limited time and will vary depending on individual circumstances.
This article isn’t advice. The government’s Pension Wise service can help if you’re over 50 and need guidance. You can also get personalised financial advice if you need it.
Will annuity rates keep on climbing?
It’s of course impossible to guess where annuity rates go from here, but it’s likely we could see further income rises in the weeks to follow.
And if we do, this could push incomes up towards the highs we saw in the aftermath of the mini-Budget back in 2022.
Regardless of where they go next, annuities are offering great value right now, and we can expect to see interest in them continue to increase.
However, it’s important to consider all of your options before deciding to buy an annuity.
What you need to know before buying an annuity
Once you buy one, it can’t be unwound – different providers also offer different rates. If you take the first quote you’re offered, without checking the rest of the market, you could make a costly mistake.
Instead, it’s best to use an annuity search engine which gives you multiple quotes from different providers. It’s a great way to help you check what’s out there, so you know you’re getting a good deal.
It's also important to include as much information about your health and lifestyle as possible as part of your annuity application.
If you suffer from a condition like diabetes or have had a stroke, then you could qualify for an enhanced annuity which will give you an increased income.
Even including data like how much you weigh, whether you drink or if you have ever smoked could mean you get more from an annuity.
You can also annuitise in stages throughout your retirement.
This means you can annuitise to secure your essential needs and keep the remainder of your pot in income drawdown where it has the opportunity to grow.
And as you annuitise more, you have the potential to benefit from higher annuity rates as you get older.