Most people are looking forward to their retirement. After having been in the workforce for 40+ years, the idea of being able to slow down, pursue hobbies, enjoy loved ones and simply do what one wants is certainly a pleasant thought. While a fair bit of time may have been spent dreaming of retirement joys, many do not spend the time they need to plan financially for the best retirement possible. As you approach retirement age you will probably receive information regarding your pension. But, you may not be getting the most competitive offers.
One way to boost your retirement fund by up to 30% is to use the open market option. This option became available to UKers in 1975 under the United Kingdom Finance Act. Through the OMO those approaching retirement age have the possibility to shop around for the best conversion for their pension pot into an annuity. The standard option is to simply accept the default rate given by the pension provider.
Of the estimated 350,000 people who reach retirement age in 2011, only one third will explore the Open Market Option. This means that two thirds of retirees are missing out on up to 30% more income, which would translate into thousands more pounds each year for the duration of their lives. The reason that so many do not avail themselves of the Open Market Option is that many are not aware of it, and others still do not take the time to speak with an independent financial advisor.
In fact, planning retirement is fairly complex, with numerous options. Working with an independent financial advisor is the best way to make sure you retire in the superior position, and take advantage of each option that would benefit you. For example, whether you smoke, or suffer from ill health, or are overweight, you could benefit most from an impaired life annuity. Annuity rates change constantly, depending on various factors, adding another layer to the complex decisions.
As you wade through your options, you must take care to educate yourself as thoroughly as possible, as these decisions will affect the rest of your life. Once an annuity is purchased, and your pension pot converted, there is no changing, adjusting or revising the annuity.
Because of the complexity of the issue, or for other reasons, some people choose to delay selecting their pension option. This ends up costing the individual thousands of pounds, in the form of income that does not come to them. Even with the fluctuation in interest and annuity rates, a fluctuation could not possibly equal what a year’s worth of income would.
If the Open Market Option interests you, and you would like to explore the most advantageous outcome for your retirement, start now. Speak to an annuity and pension specialist bureau. These independent financial advisers can help you navigate the options and walk away with the confidence that you have made the best decision possible. Their advice is paid for by the annuity provider.