Consider annuities
Annuities are sold for guaranteed income, but it seems that they have fallen out of favor in the last couple of years, and that’s due to a series of factors. First, there are pension freedoms, which might allow you to draw from your funds as much as you like.
This is also known as income drawdown, and it has become a favorite action among retirees. The second one is based on a combination of an increasing life expectancy and lower interest rates, which resulted in tumbling gilt prices, which pushed annuity rates even lower.
Given that annuities offer a fixed and guaranteed income for life, the only thing that could be considered a drawback is that they never come with any lump sum death benefit, so when you go, they go with you.
Even so, interest rates went upward as of December 2021, and annuity rates have followed suit. But if you want to do something that’s 100% bulletproof, consider an inflation-linked annuity. What does it mean? Well, it’s when the annuity payments increase every year along with rising costs. The only downside to choosing this inflation-linked annuity over a regular one is that your starting payments will be much lower.
If you’re curious to read more financial advice, here’s what we recommend: WARNING: You Can’t Hold These 5 Assets in Your IRA Anymore
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