Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Bhoddhisatva,scotia,Anonymous,Cornytiv34, for Donating to support the site

Is there a right time to buy an annuity?

Steveam
Lemon Slice
Posts: 974
Joined: March 18th, 2017, 10:22 pm
Has thanked: 1745 times
Been thanked: 534 times

Is there a right time to buy an annuity?

#461556

Postby Steveam » November 28th, 2021, 11:18 am

A paper by Steve Webb raising interesting points. It obviously depends on circumstances and objectives but they model various scenarios and ages … I found the paper very interesting.

https://www.lcp.uk.com/media-centre/202 ... n-annuity/

Best wishes,

Steve

Steveam
Lemon Slice
Posts: 974
Joined: March 18th, 2017, 10:22 pm
Has thanked: 1745 times
Been thanked: 534 times

Re: Is there a right time to buy an annuity?

#461564

Postby Steveam » November 28th, 2021, 11:40 am

I treat the deferral of my state pension very much like the ongoing purchase of an inflation proofed pension. I was lucky enough to start the deferral when the increase was 10% (and I bought a further £25 per week which is also subject to the deferral increase). There are arguments and analyses which show that taking the pension from about 70 maximises the likely amount received but I’m more taken with the longevity risk minimisation so am still deferring but will probably start taking it next year …

I think my decision making has echoes of the above paper.

Best wishes,

Steve

Dod101
The full Lemon
Posts: 16629
Joined: October 10th, 2017, 11:33 am
Has thanked: 4343 times
Been thanked: 7534 times

Re: Is there a right time to buy an annuity?

#461613

Postby Dod101 » November 28th, 2021, 2:15 pm

Steveam wrote:I treat the deferral of my state pension very much like the ongoing purchase of an inflation proofed pension. I was lucky enough to start the deferral when the increase was 10% (and I bought a further £25 per week which is also subject to the deferral increase). There are arguments and analyses which show that taking the pension from about 70 maximises the likely amount received but I’m more taken with the longevity risk minimisation so am still deferring but will probably start taking it next year …

I think my decision making has echoes of the above paper.

Best wishes,

Steve


I do not see that you are minimising the longevity risk by deferring the State pension. If anything you are increasing it because you then need to live for at least another 4/5 years I assume just to break even if you have deferred it until about age 70. So your benefit kicks in not until what, your mid 70s?
By that time others have been receiving their State pension for 10 years or so and had the chance to invest it, or go travelling when they hopefully have the health to be able to. After all the State pension is more or less inflation proofed anyway.

And of course any one of us might be dead by our mid 70s.

Dod

Steveam
Lemon Slice
Posts: 974
Joined: March 18th, 2017, 10:22 pm
Has thanked: 1745 times
Been thanked: 534 times

Re: Is there a right time to buy an annuity?

#461663

Postby Steveam » November 28th, 2021, 6:14 pm

Hi Dod. Perhaps I expressed myself poorly. I don’t need the state pension is the foreseeable future BUT if inflation were to rocket (and other investment income fail to keep pace with inflation) or I were to live an unexpectedly long time - let’s say to 100+ - then I’m protected against the longevity risk with an inflation proofed income.

If I die early then I’m unworried about the failure to collect the pension. This is the sense in which I view this as “buying” an annuity.

Best wishes,

Steve

Mike4
Lemon Half
Posts: 7084
Joined: November 24th, 2016, 3:29 am
Has thanked: 1637 times
Been thanked: 3791 times

Re: Is there a right time to buy an annuity?

#461681

Postby Mike4 » November 28th, 2021, 7:31 pm

"Is there a right time to buy an annuity?"

Yes, probably about 1989 was best, give or take a year or three.

:?


Return to “Pensions - Practical Problems”

Who is online

Users browsing this forum: No registered users and 14 guests