Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

“This year has been turbulent for many, with interest rate uncertainty, stock market volatility and a cost of living crisis hitting consumers from every direction. Those looking to retire may be surprised to find annuity rates have improved, so those who decide to annuitise could be hundreds of pounds better off than if they retired at the start of 2022.

“Despite an improvement to the average annual annuity income, retirees may well opt for drawdown due to the flexibility. Those who remained fully invested in a pension would likely note the impact made on pots during the stock market volatility in 2022. As is ever the case, consumers would be wise to go over their retirement options with an independent adviser. Should someone’s circumstances change, whether due to a deterioration of health or a change in attitude to risk, an annuity may be a suitable choice providing a guaranteed income during retirement, but this would depend on future annuity rate pricing. Indeed, choosing part annuity and drawdown may suit those who desire a bit of flexibility but also a set income that a lifetime annuity can offer.

“The cost of living crisis may well be a concern for many approaching retirement, so it is essential to consider all the options available that could plug any retirement shortfall. Consumers who still have some time before they retire could consider opening a Lifetime ISA for a Government 25% boost on their savings, but others nearing retirement may consider equity release. However, the decision to release equity from a home requires careful thought, particularly its impact on inheritance.”