There are two approaches to calculating the retirement capital you need. The first approach is based on the following idea: by the age of retirement, a person creates savings, and then lives on interest from his capital. In retirement time, a person uses only annuity without spending the capital itself. When a person's life journey is over, the capital is transferred to children. This approach is good for unlimited time income: if a person lives for at least two hundred years, he will invariably have the means for that.
The second approach is that a person intends to fully spend his pension capital without inheriting it. At the stage of personal pension planning, we together with the client determine the age and period he would like to provide himself with a stream of retirement income, as well as the amount of this income. The second approach requires less funds than the first one; therefore, it will be easier to solve this problem. However, there is a danger that a person may outlive his money. And this is one of the most powerful retirement fears among senior people, as the person will have no means to live on at all.
Flat-rate annuities have become a type of assets attractive this year. These products have guaranteed returns and offer profitability much higher than the index return.
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