When you reach retirement and what is supposed to be your longest holiday you want to ensure that when you exchange your pension for an annuity that the income is going to be looking after you for many years to come. That is why you probably need a guaranteed annuity.
So why a guaranteed annuity?
A Guaranteed Pension Annuity guarantees to pay you a regular income for life. When you purchase your annuity you’ll have the flexibility to choose whether your income stays the same throughout retirement, goes up each year by a fixed amount, or matches yearly changes in inflation by being linked to the Retail Prices Index (RPI).
When you are in retirement you do need the peace of mind that the income you have will not fall. There are many alternatives to the guaranteed annuity such as invested annuities or fixed term annuities but with these your income can alter each year, they also depend very much on performance of the underlying investments. The value of these investments can fall or if in with profits depend on bonuses added.
So in summary to be safe that your income will not fall in retirement you need to look at guaranteed annuities.