At Enable Independent, IFA's in Bishop's Storford, we realise that financial services are a highly complex subject, and bearing this in mind we always try to explain financial planning in a straight forward way, so we thought we would give you a bite size explanation about annuities.
There are two basic types of annuities, deferred and immediate:
• Deferred – this means that your money will be invested for a period of time until you are already to begin withdrawing money from it, normally in retirement.
• Immediate – this like the name implies, means that you can receive payment from your annuity soon after your initial investment, for example you might consider buying an annuity if you are approaching retirement age.
At some stage deferred annuity can also be converted into an immediate annuity if your circumstances change and you decide to access your payment straight away.
Within the two categories, the annuities can be either be fixed or variable, depending on whether the payout is a fixed sum, or tied to the performance of the overall market or group of investments, or you can also opt for a combination of the two.
When thinking about taking out an annuity or any other type of financial product, make sure you check out commissions, some insurance brokers can charge as much as 10% for an annuity.
If you decide to pull out money within the first several years after your purchase you could have to pay high charges.
If you take out an annuity you will not have to pay tax on the withdrawals, but if you already pay tax on your income, you will still need to pay tax on any money you invest into the insurance product.
Planning for your future is probably one of the most important things you will do in your life, so it is important to get the right advice. At Enable Independent, we offer planning at any stage of your life, from planning for a family, to paying for your children’s university/weddings, as well as retirement and wealth planning. We make sure all of our fees are transparent, and we will also provide you with a vast selection of products from across the market place.
The individual and group pensions market is an ever changing world, with new legislation being brought out on a regular basis, it is difficult to keep track of what options are available with regard to your retirement planning. Hopefully within this section of our website we can explain many of these options in plain simple language and help you plan for your future. This information is purely intended as guidance and therefore if you require any specific advice please contact us directly for independent financial advice.
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