- There are many types of annuities available that can help you achieve your financial goals
- Disclose all the information necessary to get the best rate possible
- Only using part of your pension pot might be better for what you want to achieve
If you’ve decided to buy an annuity with some or all of your retirement money, the next step is to choose the right type and incorporate it into your wider financial planning in the most effective way.
A key decision is whether to opt for an inflation-linked or level annuity. The former tend to offer a much lower starting income, but one that always rises with inflation, and vice versa for the latter. A level annuity runs the risk that your annuity income will not cover your real expenditure in future, although often retirees' expenditure reduces as they get older. Another factor is whether you have other sources or assets you can rely on if an annuity lost some of its spending power – particularly if those assets are inflation-linked. See The best type of annuity to buy (IC 9 June 23).