Over-50s rush to use 'valuable' tool ahead of state pension age rise to secure income in retirement

Figures from Standard Life show that 48 per cent of retirees have stopped working at or before their 60th birthday. This leaves a six-year gap before they can access state pension support.

With the pension age rising to 67 from next year, over-50s are increasingly acting early to avoid an income gap in retirement.

The move reflects a broader shift in retirement behaviour, with 91 per cent of over-50s turning to annuity products to provide guaranteed income between leaving work and receiving their state pension.

A healthy 65-year old with a £100,000 pension pot could now expect to receive approximately £7,720 a year, according to the data from Standard Life’s annuity tracker.

The trend highlights growing demand for financial certainty during what is often a financially fragile transition period.

Standard Life's sales data shows that 64 has become the average age for purchasing lifetime annuities, whilst fixed-term annuities are typically bought at 63.

These figures demonstrate how retirees are strategically timing their annuity purchases to coincide with the years immediately before state pension eligibility.

The data highlights a clear pattern of financial planning among over-50s who recognise the need for guaranteed income during their early retirement years.

Pete Cowell, Head of Annuities at Standard Life, said: "As The Beatles sang in When I’m 64, the question of whether you’ll still be needed and fed in your later years is significant one, and reminds us of the importance of planning for the future.

"While the decision around if, how and when you choose to retire is unique to each person, the fact that over-50’s 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."

This recognition was reflected in figures from the Association of British Insurer which revealed annuity sales have increased by 34 per cent last year. With the state pension age soon to rise, experts expect this trend to continue.

Different annuity products offer various options for retirement planning, with lifetime annuities providing guaranteed income for life and fixed-term annuities offering income for a set period.

Cowell explained: "What's important to remember when considering annuities is that there are different types of annuity products and options available, and different ways they can be used as part of a wider mix of retirement income solutions."

He highlighted that fixed-term annuities can be particularly useful for those navigating phased or full retirement before reaching state pension age.

For couples planning their retirement, joint life annuities provide additional security.

Cowell noted: "For those considering the financial well-being of their loved ones, a joint life annuity can also provide an income that ensures, event after one partner passes away, the surviving spouse continues to receive financial support."

These various options allow retirees to tailor their income solutions to their specific circumstances and needs.