Meet Sarah

Sarah is 72 and has been in income drawdown since she retired several years ago. She enjoys having control over where her money is invested and how much she can withdraw each year.

However, she’s recently become concerned that if her investments fell significantly the amount she could withdraw might reduce dramatically.  She’s started to think about buying an annuity, but she has reservations.

She’s heard that while annuities provide a guaranteed income for life there isn’t the ability to vary income and there is no prospect of her income growing over time if she invests wisely. She’s still comfortable taking investment risk, but just not quite so much.

Her financial adviser suggests Sarah considers the Flexible Income Annuity. This allows Sarah to choose the income level she would like (within certain limits) and still invest her money to grow her income. But that’s not all. The Flexible Income Annuity has a special Minimum Income Guarantee. This means, whatever happens to Sarah’s investments, her income can never fall below a guaranteed amount.

One more thing. The Flexible Income Annuity pays a regular bonus. This arises because people who die earlier than expected may not have used up their fund (even after any death benefits are paid out). This excess or surplus money is effectively distributed each year by a special Lifetime Bonus. As Sarah’s adviser explains, because of this extra bonus Sarah doesn’t need to take as much investment risk as she would have in drawdown. All in all, Sarah is delighted with the recommendation.