The Beatles turned 64 into a symbol of enduring love through their famous song When I’m 64. The age has other significances however and marks an important financial planning milestone for many today. Sales data from Standard Life, part of Phoenix Groups shows that 64 is the average age at which people purchase lifetime annuities, while it’s 63 for fixed term annuities.
With the current state pension age at 66, the data shows how over-50’s are recognising the benefits of creating a guaranteed income to help bridge the income gap in the years leading up to the state pension age.
Standard Life research found 48% of retirees have retired by age 602, leaving a six year window before state pension payments begin, which will widen when the state pension starts to rise to 67 next year.
With nine in ten (91%) over-50s saying they value income security and certainty in retirement, annuities are seen as key for those seeking guaranteed income during their transition from full-time work to retirement, bridging the gap before state pension payments begin. Indeed, almost half (46%) of over-50’s planning to purchase a fixed-term annuity say they will do so at retirement to help bridge this income gap3.
Pete Cowell, Head of Annuities at Standard Life, said: “As The Beatles sang in When I’m 64, the question of whether you’ll still be needed and fed in your later years is significant one, and reminds us of the importance of planning for the future. While the decision around if, how and when you choose to retire is unique to each person, the fact that over-50’s are choosing to purchase annuities well ahead of the state pension age is telling. With their ability to provide a guaranteed income, either for life or for a fixed-term, there is increasing recognition that they play a valuable role in covering costs in the early part of retirement and beyond. This recognition was reflected in figures from the Association of British Insurer which revealed annuity sales have increased by 34% last year4 With the state pension age soon to rise, we expect this trend to continue.
“What’s important to remember when considering annuities is that there are different types of annuity products and options available, and different ways they can be used as part of a wider mix of retirement income solutions. Lifetime annuities can provide a guaranteed income for life, while a fixed-term annuity ensures a guaranteed income for a set period, which can be particularly helpful for people navigating a phased or full retirement before state pension age. For those considering the financial well-being of their loved ones, a joint life annuity can also provide an income that ensures, event after one partner passes away, the surviving spouse continues to receive financial support.”
|
