The average age to purchase a lifetime annuity is 64 as retirees seek to bridge the income gap leading up to State Pension age, new research from Standard Life has found.
For fixed-term annuities, the average age is 63.
With the current State Pension age at 66, Standard Life’s research found 48% of retirees have retired by age 60, leaving a six-year window before State Pension payments begin. The retirement specialist said the findings highlight that the over-50s are increasingly recognising the benefits of creating a guaranteed income to help bridge the income gap.
With nine in 10 (91%) of over-50s saying they value income security and certainty in retirement, annuities are seen as key for those seeking guaranteed income during their transition from full-time work to retirement.
Pete Cowell, head of annuities at Standard Life, said: “While the decision around if, how and when you choose to retire is unique to each person, the fact that over-50s are choosing to purchase annuities well ahead of the State Pension age is telling.
“With their ability to provide a guaranteed income, either for life or for a fixed-term, there is increasing recognition that they play a valuable role in covering costs in the early part of retirement and beyond.”
Cowell said those choosing an annuity need to consider the different products and options available and how they can be used as part of a wider mix of retirement income solutions.
“Lifetime annuities can provide a guaranteed income for life, while a fixed-term annuity ensures a guaranteed income for a set period, which can be particularly helpful for people navigating a phased or full retirement before State pension age.
“For those considering the financial well-being of their loved ones, a joint life annuity can also provide an income that ensures, even after one partner passes away, the surviving spouse continues to receive financial support,” he added.
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