Since I hit 40 thoughts of retiring have been on my mind.
Being self employed these days it is an area I worry about not having a pension fund building up as I used to when I worked for the council. I know it is something I need to sort out and to sort out soon. It is essential these days, there is no chance we would have much life quality on a state pension.
Because my pension was previously collected from my wages and totally organised for me I have little understanding of the world of pensions and actually when I can to read more about it I found it all slightly mystifying.
Are you clued up on pensions?
I have been doing some reading at Annuities4u who explain very simply what annuities are…
Many people believe that when you reach retirement, you’ll immediately be granted access to your private pension fund. In fact, you can take a lump sum amount of up to 25% of your total pension fund and the remainder will be used to provide a regular income for the rest of your life, in the form of an annuity.
In simple terms, an annuity allows you to convert your pension into a regular income, which can be used to fund your retirement. Just how much you will receive every month from your annuity depends on a number of factors
I didn’t realise that you could shop around for an annuity provider and that it didn’t have to be your pension provider.
This means you can really find out who is the best annuity provider for you. This is called taking the open market option. Once agreed and signed your annuity is unchangeable, you will then receive a guaranteed income for the rest of your life.
My goodness its a bit of a major decision then isn’t it who you sign up too.
I think it is really important to think about pensions and understand money processes that will impact us in the future, we need to keep our eye on the ball and be well prepared for this time.