Downsizing, using difference for annuity

AdrianG08

Hi

Elderly relative is currently looking to downsize his house (moving from Dublin to midlands). Hoping to have between 100-150k left over following the sale.

Can anyone tell me what kind of monthly/annual annuity he could get within the range of the difference (100-150k)? He is 74 this year.

Thanks a million in advance.

Buddy Bubs

Annuity rates somewhere in the region of 4 to 5% for a pension fund from age 65 nowadays, maybe a bit higher for a 74 year old but no way would I buy an annuity with it. Won't be buying one with my pension anyway.

100k will likely give him 5-6k a year.

AdrianG08

Buddy Bubs wrote: »

Annuity rates somewhere in the region of 4 to 5% for a pension fund from age 65 nowadays, maybe a bit higher for a 74 year old but no way would I buy an annuity with it. Won't be buying one with my pension anyway.

100k will likely give him 5-6k a year.

What other options would you suggest rather than buying an annuity with this lump sum?

Wanted an annuity for them rather than lump sum as a LS would just be burnt through in no time.

Doodah7

Put it into a 5-year State Savings Cert?

coylemj

For a lump sum of 100K, Irish Life is quoting €5,436 p.a. for a flat (no increases) annuity with a guaranteed payment period of five years for a 74 year old male. No survivor's (widow/er) pension.

Throw in any class of modest annual increase and/or a survivor's pension and it will reduce drastically.

An annuity is a guaranteed income for life but with interest rates so low, they are currently very poor value for money.

http://www.pensionchoice.ie/

Henry Ford III

If you have no dependents or relatives you'd like to leave this money to and want to secure a guaranteed income for life an annuity can be an ideal purchase.

AdrianG08

AdrianG08 wrote: »

Hi

Elderly relative is currently looking to downsize his house (moving from Dublin to midlands). Hoping to have between 100-150k left over following the sale.

Can anyone tell me what kind of monthly/annual annuity he could get within the range of the difference (100-150k)? He is 74 this year.

Thanks a million in advance.

Talk to a financial advisor.


The reality is that the return on investment will be proportionate to the sum invested. A lump sum of 100k - 150k is only ever going to allow for relatively small withdrawals while preserving the capital. If the money cannot be invested beyond the short term, with relatively little risk, then this greatly limits any possible returns.

If there are likely large expenses which will be incurred within the next 5 years and can't be met from another source it might be better to keep the money, or most of it, liquid.

Stark

Do you pay income tax on the annuity income if the annuity was bought with regular savings instead of pension fund?

The J Stands for Jay

Stark wrote: »

Do you pay income tax on the annuity income if the annuity was bought with regular savings instead of pension fund?

It's taxed at 20%, but only on the portion that's considered income (each payment is considered to be made up of income and a return of capital).