Most people associate an annuity as a contract that is in place for life however, it is possible to utilise a fixed term annuity which, as the name suggests, provides a guaranteed income for a specific period of time, with a predetermined guaranteed value at the end.
Fixed-term annuities offer several benefits:
- Predictable Income: They provide a guaranteed income for a specific period, which can help with budgeting and financial planning before other pensions, such as the State Penson or defined benefit pensions become payable.
- Flexibility: You can choose the term length that best suits your financial needs, typically ranging from 1 to 30 years.
- Security: The payments are not affected by market fluctuations, offering peace of mind.
- Potential for Higher Returns: Compared to other low-risk investments, fixed-term annuities can sometimes offer higher returns due to the fixed interest rates.
- Guaranteed Maturity Value: If you do not require the full income your pension could provide over the fixed period, you could set up a lower income and receive a pre determined value back at maturity.