Increasing Income Annuity

Increasing Income Annuity













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Increasing Income Annuity

Unlike a level annuity, this type of annuity will increase the payment each year. This is known as escalation. This escalation can be done by a set amount, say 3% or 5% or it can be linked to retail price index (RPI). Having an increasing income annuity will help to offset rises in the cost of living, however it does come at a cost at it is likely that the initial income you receive will be substantially reduced. This reduction in the initial income may be 25% or more for a 3% annual increase.