Annuity income returns growth during 2022

The average annual annuity income rose by £898 since the start of 2022, according to Moneyfacts data.

As of this month, the average annual annuity income stands at £3,190, rising by £898 since the start of the year.

The most notable peak over the past three months was during October, where on both the 17th and 24th, the average yearly income stood at £3,389.

Those looking to retire may be surprised to find annuity rates have improved, so those who decide to annuitise could be hundreds of pounds better off than if they retired at the start of 2022.

Despite an improvement to the average annual annuity income, retirees may well opt for drawdown due to the flexibility. Those who remained fully invested in a pension would likely note the impact made on pots during stock market volatility in 2022.

Should someone’s circumstances change, whether due to a deterioration of health or a change in attitude to risk, an annuity may be a suitable choice providing a guaranteed income during retirement, but this would depend on future annuity rate pricing.

Indeed, choosing part annuity and drawdown may suit those who desire a bit of flexibility but also a set income that a lifetime annuity can offer.

The cost of living crisis may well be a concern for many approaching retirement, so it is essential to consider all the options available that could plug any retirement shortfall.

Consumers who still have some time before they retire could consider opening a Lifetime ISA for a Government 25% boost on their savings, but others nearing retirement may consider equity release. However, the decision to release equity from a home requires careful thought, particularly its impact on inheritance.

As is ever the case, consumers would be wise to go over their retirement options with an independent adviser.