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Around one in seven workers over 50 are considering an annuity in retirement as rates improve and living costs rise, new research from Legal & General suggests.
An annuity converts your savings into a guaranteed income for life or a specific period of time.
Retirees used to have no choice but to convert their pension pot into an annuity, but this changed in 2015 with pension freedoms.
Annuities have since fallen out of favor as many retirees opt instead for a drawdown, which allows them to take some money out of their fund and keep the rest invested.
Nearly one in three respondents said they would consider an annuity because of the guaranteed income, while one in ten said better rates had made them consider one.
Smart Saver: An annuity converts your savings into a guaranteed income for life or a specific period of time.
A 65-year-old taking out an annuity with £100,000 and no inflation protection could earn an income of £7,265 today, according to figures from investment platform Hargreaves Lansdown.
Two years ago, they would have received an income of £6,225.
A Legal & General spokesman said: “The improved rates mean people can get more for their money, along with the appeal of the stability and peace of mind they offer.”
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