Is it worth delaying your annuity purchase?
The variables that effect the amount of income you can expect to receive from an annuity are; purchase price, age, gilt rates and life expectancy.
If you delay purchasing an annuity then you will be older when it is finally purchased, the annuity will be paid for a shorter time and this equates to a higher annuity income.
Until an annuity is purchased it remains invested in a pension and depending on your investment choices the value could go up or down giving you more or less income to purchase an annuity.
Gilt rates have improved since August 2012 (about 2.1% to 2.7% Feb 2013). Movements are difficult to predict but if the trend continues then annuity rates improve further.
Life expectancy is generally increasing meaning that income has to be paid for longer. It must therefore start at a lower level. As we live longer annuity rates get lower.
Finally, each month that you delay is a months income lost. This has to be recovered by way of a higher annuity rate when you finally purchase the annuity.