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Retirement income options

Making the right choice for retirement income

The decisions you make about your retirement income are as crucial as they are complicated — remember that you could be relying on this income for 30 years or more.

Annuity

An annuity is an insurance product which, in exchange for a one-off lump sum (usually taken from your pension pot) provides you with a regular annual income for life or for a fixed period of time.

For a long time, buying an annuity has been the de facto retirement income solution for most people, but since 'pension freedom' legislation was enacted in April 2015, there are now more financial planning options than ever open to everybody over the age of 55.

For more information on the various types of annuity, read our guide to annuities. Certain types of annuity can offer up to a 40% improved rate on others, so it is well worth doing your research.

Pension freedom options

Drawdown, trivial commutation, phased retirement and even alternative investments are some of the broad categories in which new retirement income products are emerging all the time. Factors to consider are the size of your pension pot, your relationship status, your health and that that of your partner if you have one, and your attitude to investment risk.

Next steps

To begin exploring some of the options available to you within these categories, read our guide to alternatives to buying an annuity.

If you're not sure on the right strategy or option for you, you should seek financial advice.

Last updated: 02 June 2015

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