Saving for retirement is important, though with so many different ways to invest your money, you might be wondering which option is best for you.
If you’re looking at purchasing an annuity and wondering what a pension of £300,000 or more will buy, it’s always best to seek professional advice first, as the rules surrounding pensions and annuities aren’t always straightforward.
However, to give you some idea of what annuity you can buy with £300,000 for your pension income, we’ve written this article. In it we’ll discuss:
- What annuity will £300,000 buy?
- Should I buy a 300k annuity?
- How much annuity do I need for a comfortable retirement?
- Speak to a pensions expert today
For the best advice on how to manage your pension, speak to one of the advisors we work with. Call us on 0800 304 7880 or make an enquiry here for impartial advice tailored to your circumstances.
What annuity will £300,000 buy?
While we’ve outlined what a £300,000 annuity could buy, bear in mind that the set figure you receive will not factor this entire amount in.
Using the UK Government’s pension annuity calculator, you’ll see that if you buy a £300,000 annuity at age 65, you could receive:
- A maximum, tax-free lump sum of £75,000
- An annual, taxable income of £11,900 for the rest of your life
Of course, you can choose to take a smaller lump sum, or to take no lump sum at all. To get up-to-date annuity rates and a better understanding of what your retirement income options are, including the purchase of an annuity, speak with an expert.
The qualified and experienced pension advisors we work with can help you make sense of your retirement plans. They can answer all your questions about annuities, retirement income, your potential financial needs and what annuity £300,000 will buy.
Should I buy a £300k annuity?
Until 2015, in order to access the pension you’d built up throughout your working life, you had to buy an annuity. Since pension freedoms were introduced, you no longer have to buy an annuity to gain a pension income.
However, because of the guarantees that come with annuities, they still remain a popular choice.
There are different basic lifetime annuity options that can help make sure you receive all of the income you’ve saved during your working life, including:
- Single lifetime annuity, which provides a set annual income for life until you pass away
- A joint lifetime annuity, which provides a set annual income until you pass away, at which point your chosen beneficiary will receive an income for life.
How an annuity expert can help
An annuity can help you ensure you know how much pension you will receive and that you and any named beneficiaries will be able to enjoy that income. However, once you buy an annuity and the initial 7-14 day cooling-off period has passed, you cannot change your mind and withdraw from it. That decision is final regardless of any change in circumstances.
Because of this, it’s recommended that you speak with an expert before making any decisions about your pension. A qualified and experienced annuity advisor can help you make the right decision regarding your pension, for your specific circumstances. That could be an annuity, income drawdown or a combination of both.
Make an enquiry to get started.
How much annuity do I need for a comfortable retirement?
When it comes to planning your retirement, there are a lot of unknowns. This can make decisions around your preferred pension savings and income options seem impossible. However, there is help at hand.
Research from Aegon suggests that for a comfortable retirement, someone planning to retire at the age of 65 would require an annuity of around £300,000. Added to their state pension payments, that would give an income of around £27,000 per year.
However, state pension amounts have changed. For the 2019-2020 tax year, the new full state pension (for those who’ve paid national insurance for 35+ years), is £168.60 per week. However, women born before 6th April 1953 and men born before 6th April 1951 will still receive the old state pension, which is £129.20 per week.
The age at which you can claim is changing, too. In November 2018, the age you can claim your state pension was 65 for men and women, though this will increase gradually to 67 by 2028. Because people are living longer and the state pension is reviewed regularly, this could change again.
Speak with a pension and annuity expert
To find out more about annuities and what a £300,000 pension could get you call us on 0800 304 7880 or make an enquiry online.
We’ll then put you in touch with the right pension advisor for your needs.
There’s no obligation to invest or marks against your credit history, we’ll connect you and you can ask all the questions you have about annuities and pensions.
Your advisor can also help make sure you make the best decisions about your pension savings and retirement plans to ensure you can enjoy life when you stop working.