I‘ve done a few videos over the years comparing annuities and drawdown for taking pension benefits. Annuities themselves are a very hot topic right now, so I think it’s time I updated things…
#ukpension #annuity #drawdown
🔴 – Click here to watch Drawdown, Annuity & UFPLS examples
🔴 – Click here to watch Drawdown vs UFLPS vs Annuity
➡️ Work with Pete:
👉 MeaningfulAcademy – Financial Foundations:
👉 MeaningfulAcademy – Build Wealth:
👉 MeaningfulAcademy – Retirement Planning:
🏷️ Use PROMO Code “YOUTUBE” to save on any of the three courses.
Chapters:
0:00 Welcome
0:17 Intro
0:56 The key differences
2:49 Annuities are back in favour
4:58 Factor 1 – Need for guarantees
6:07 Factor 2: Flexibility
7:32 Factor 3: Leaving a legacy
8:35 Conclusion
🎥 Budgeting:
🎥 Paying Off Debt:
🎥 Wealth Protection:
🎥 Investing:
🎥 Platforms, Pensions, ISAs:
🎥 Risk:
🎥 Retirement Investing:
🎥 Pension Retirement Options:
🎥 Estate Planning:
🎥 Money & Life:
📙 The MeaningfulMoney Handbook:
The MeaningfulMoney Community (Facebook):
👉
👉 Life Insurance with LifeSearch:
👉 Farewill – Discount off your Will:
FOLLOW ME:
✔ Facebook:
✔ Twitter:
✔ Instagram:
✔ LinkedIn:
✔ Website & Podcast:
⚠️ IMPORTANT: Please be aware that MeaningfulMoney does NOT endorse or recommend ANY people or businesses claiming to be experts in crypto or other investments. We would never recommend you any investment strategies within the comments section. Please protect yourself against spam and misleading information from fake accounts and please do not share any private or sensitive information.
📫 Leave me a comment below – I read all of them and love hearing from you!…(read more)
LEARN MORE ABOUT: Retirement Annuities
REVEALED: How To Invest During Inflation
HOW TO INVEST IN GOLD: Gold IRA Investing
HOW TO INVEST IN SILVER: Silver IRA Investing
What is your take? Would you go for a drawdown or an annuity?
Hi Pete, with a Cash Lifestyle Pension and a Drawdown Lifestyle Pension, does it matter which one you pay into over the long run, as the cash one can simply be placed into a drawdown nearer retirement?
I ask due to looking over the Scottish Widows money 4 life options.
Thank you for a brief explanation on whether it matters a Cash Plan or Drawdown Plan.
Are mypensionexperts a good company?
If annuities are closely tied to the gilts, could you do your own annuity within a pension wrapper by buying gilts or gilt based EFTs?
How does the 25% TF work with annuities, fixed term or otherwise? Can annuity income have the TF component? Ie if I don't want the lump sum upfront.
Stumbled across your video. I'm a annuity broker, it's certainly becoming a more even playing field.
One thing you mentioned which your audience could do with more information on is the Fixed Term Annuity. You carefully skimmed over it and I can't help but wonder if that's because Flexi Access Drawdown offers you, the IFA, a residual income? In my experience clients have not been informed by their IFA about this product. Fixed Terms are offering 4.6% apr return on 5 year terms (£100k example) with no investment risk, full death benefits and many are leaving investment products in this direction.
You don’t do either, “drawdown” is the word I never ever want to hear, I want to keep control of the principle, which is why I would never do an annuity, so just put all your retirement into JEPI and go to bed at night
Have you got a video that explains the tax implications after taking the first 25%? We're both non taxpayers with small pots.
Can you have a drawdown then change it into a Annuity ?
When it comes to retirement income, I like the idea of using a guaranteed annuity for my fixed living expenses for me and my spouse, and using the draw down method for inflation, etc. I just do not want to worry about the stock market crash every 7-10 years. Good idea to suggest using both an annuity and drawdown method for retirement income.
I'm a financial adviser myself and this is the best explanation of drawdown vs annuity I've ever heard.
One question I have (without researching if i am honest) is whether the income from annuities is tiered based on the invested income amount? for example, would i get a slightly better return from investing say 250k compared to 100k?
Interesting video, can never have options to be honest. as everyone has unique circumstances
Where is the 7+% annuity? I can't find such rates
Would it be possible to create a video for late 20/ early 30 yr olds? What should we be doing to build wealth, maximise tax wrappers etc? What else should we consider other than workplace pension, ISA and LISA? Thanks!
I took the drawdown in December 2019 just before the Wuhan. Went to my financial advisor and pensionwise for advice. I now have a SIPP with the Pure Gold Channel. I'm so happy I did. Annuities just don't pay like bonds. With the markets being as they are. Gold as outperformed the FTSE and S&P500. I now live in Thailand retired early. No value in Bonds and the worst is yet to come.
A good video, however, I'm surprised you didn't go in to more detail about the "Fixed Term Annuity" options out there & available. They are incredibly flexible and can be taken out for between 3 & 30 years, therefore you have a working model that works really well with your SIPP (or other product) and have the best of both worlds.
Another excellent informative video… I was thinking of annuity purchase but the video made me realise that as I already have a bedrock of funds in my case it would not really be appropriate. With markets going south it’s easy to make short term decisions and your other videos about not stressing too much about this also really helped… I recommend your channel to all my colleagues!
Once again, Thank you.
It was an easy decision for me with guaranteed income from – a State Pension, a BTL property and Work Place Defined Benefit Pension due to kick-in in just 10 years time.
When I learnt of my previous career defined contribution private pension having performed well over the last 16 years (even without any further contributions since leaving the company in 2004) I just wanted a 10 year salary boost so I could go to 4 days a week and enjoy a better work life balance-Long summer weekend anyways and funds for a luxury overseas holiday each year while still not have to double think every day mundane or luxury items and activity. The drawdown is forecasted to expire in 10 years but that’s fine – I’d rather the money while fit, able and inclined to be adventurous.
Thanks for a great video.
Interesting as I had discounted annuities. Can I use my lump sum from a DB pension to buy an annuity to cover the gap between getting my DB pension and state pension?
Great material as always, thanks. Can anuity be bought using just money from private pension pot or any money can be used ? For example, ISA savings?
Very informative video. Can you buy a fixed term annuity using money from an investment ISA and can you get one before you're 55?
Great video as ever, would really like to see your comments on using equity release from property to part finance retirement.
Annuitants with short future life subsidise annuitants with long future life. BOTH subsidise the insurance company whose pricing model flexes actuarial life expectations to build in their profit margin.
A question if I may Pete. 25% of a pension is tax free however annuity payments are fully taxable right? Does this ever factor in to your planning for clients?
Can you reserve an annuity to guarantee the rates on offer now but defer a final decision to take it for up to 6 months (in the same way you can a mortgage offer) ?
I was looking at a fixed term annuity until my pension but then I ran the numbers and current CDs rates (in the US) killed the 10 year annuity quote.
Another excellent video, giving us lots to think about when planning ahead. Thanks Pete. I am hoping to retire a few years early, and am currently leaning towards going for a temporary annuity with one pension pot, which will cover me until my DB pension kicks in.
I'm just about to use 25ish% of my drawdown pot to buy a fixed term annuity because of the recent rise in annuity rates making it so much more attractive. My drawdown pot has lost around 12% of its value since the turn of the year. I've got my health and have only recently retired early. I consider that the value and certainty of income from the annuity whilst I get from converting compensates for the drawdown drop – and I feel sure that in the long term the remaining drawdown pot will increase in value.
Plus of course there is the 25% tax-free sum I'm taking with the annuity providing funds for extras like holidays.
Simples Pete
If your requirements can be met by an annuity – get one.
If you cant then Dont
Simples
Pete, can I use my pension pot (workplace pension) to buy an annuity for my wife (she is older than me, so potentially better rates)?
Very informative, thanks
I would consider a pension annuity, now that rates have recovered, not because I'm indisciplined and might spend all my pension pot but more the opposite: because it gives me permission to spend something IYSWIM.
Another great video, Pete. Informative and understandable! Would you know if the trend of improving retirement annuity rates implies improving "Immediate Needs" or "Care" annuity rates too? (These are annuities for care home fees.) Thanks.
Cracking video Pete. Getting a lot more enquiries for annuities these days! Thank for making this, it’ll help a lot of people.
I’m considering both. An annuity for 15 years. Leaving 60% invested/drawdown I have no requirement to leave a legacy so it’s about spending whilst I have the health to do so.
Interesting video Pete, thanks. One question that you might be able to easily answer: Annuities appear to be always discussed as being sourced from pension-held funds; Can someone fund an annuity from non-pension savings if they wish? Are there any rules on this? Thx in advance.
This was great – seeing the two approaches compared side-by-side was really helpful. Personally I'm a few years away from having to decide, but I like the blended approach.
"but if you only live for two years after 65 that money is lost and you really miss out"
But you're dead anyway !!! that really is missing out !
Evening Pete, I like the idea of part annuity now that you have mentioned it. That would hopefully cover a period of retiring earlier to the state pension payment kicking in. Guess I need to turbo the payments into the pension as per your other video (increase every 3 months). Thanks for the update and I enjoy your content as it is all based on factual information.
What is your opinion on a fixed term annuity with a guaranteed maturity value. The lump sum can be put into drawdown at a later date.
Makes good sense.
Another interesting post, thanks.
From what I've seen, drawdown appeals to me most thus far, but I have a year to go before I retire and I am still mulling over my options.
Funny though, of the three companies I've contacted so far for advice, none of them knew what UFPLS was.
Thank you Pete, this is really useful information ☺️