Around one in seven workers aged over 50 are considering an annuity at retirement as rates improve and living costs rise, new research from Legal & General suggests.
An annuity converts your savings into a guaranteed income for life, or for a specific amount of time.
Retirees used to have no option other than converting their pension pot into an annuity, but this changed in 2015 with pension freedoms.
Since then, annuities have fallen out of favour as many retirees opt for drawdown instead, which allows you to take some money from your pot and keep the remainder invested.
Nearly one in three of those surveyed said they would consider an annuity because of the guaranteed income, while one in ten said better rates had made them consider one.
Savvy saver: An annuity converts your savings into a guaranteed income for life, or for a specific amount of time
A 65 year old taking out an annuity now with £100,000 and with no inflation protection could get an income of £7,265 today, according to figures from investment platform Hargreaves Lansdown.
Two years ago, they would have received an income of £6,225.
A Legal & General spokesman said: ‘Improved rates mean that people can get more for their money, paired with the attractiveness of the stability and peace of mind they offer.’
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