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UK retirees who are annuity holders are more likely to report lower levels of stress and the highest level of financial confidence compared to those without one.
This is according to research from Legal and General and the Happiness Research Institute, an independent Danish think-tank.
The research also shows the top reason people opt for an annuity (31%) is as a result of a recommendation from a financial adviser.
Retirees with an annuity score more positively across multiple wellbeing measures.
They report greater satisfaction with their current lives, relationships, free time and social activities, with 51% more likely to report lower levels of stress than those without one.
Retirees who are annuity-holders also feel more financially secure, as they are more likely to report the highest level of financial confidence compared to those without one (24% versus 21%).
They were also 40% more likely to consistently afford their credit-card payments or loans compared to those without one.
Still, according to the latest Financial Conduct Authority Retirement Income Market Data, only 10% of pension pots accessed for the first time in 2023/24 were used to purchase an annuity.
Despite this low take-up, advisers play a big part in those who do choose to purchase one.
Over a fifth (23%) of retirees said the draw of receiving regular payments and the assurance of a stable income that lasts a lifetime are key factors in buying an annuity.
Additionally, 16% opted for an annuity to make budgeting easier, while 13% wanted greater control over their finances.
• If you would like to find out more about the pros and cons of buying an annuity, Wealth of Advice can help. We offer a wide range of impartial advice, always tailored to the individual client’s needs and circumstances. For a free copy of our guide What is an Annuity? visit https://www.wealthofadvice.co.uk/financial-guides/annuity-guide Alternatively, contact us for a free, no-obligation consultation. Tel. 0191 384 1008 or email enquiries@wealthofadvice.co.uk
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