When you retire you have the option of purchasing an annuity. An Annuity is a guaranteed income for life which is unaffected by market conditions. However, the size of the annuity is determined by the value of your fund, the type of annuity, interest rates and your life expectancy, all at the time of retirement.
While an annuity gives you the security of having a guaranteed income for the rest of your life following retirement and can be the best option, you must bear in mind that if you retire during a time of low interest rate levels your guaranteed level of income is much lower.
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