Aside from the income, there are a few things to consider and decisions to make. You'll also need to decide how much of your pension savings you want to take as a tax-free lump sum. You are usually able to take up to 25% of your pension savings as a tax-free lump sum.

This might work for you if you fancy rewarding yourself for all those years of work with something like a holiday or a new car, but please remember that taking some of your fund as tax-free cash will reduce your income.

Some older policies may provide benefits based on Guaranteed Annuity Rates (GARs) which are likely to provide a higher retirement income than is available on the market from a standard annuity so make sure you check your policy documents to understand if this applies to you.

It's important to remember that annuities are not normally flexible. Once you've used your pension savings to buy an annuity, there's no going back and you cannot normally make any changes. This means it's essential to do the research and get the best possible deal to suit your circumstances.

In the majority of cases, you won't be able to purchase an annuity directly from Zurich.

You can tailor your annuity to suit your circumstances by, for example: protecting your income against inflation or providing an income for your spouse when you die. Including these features increases the cost of buying the annuity which means that you will get less regular income for your money.

If you have certain health or lifestyle conditions that could affect how long you're likely to live, you might be able to buy an enhanced or impaired life annuity. For example, smoking, regularly taking medication, being underweight or overweight, if you've worked in a hazardous occupation or if you live in an area where life expectancy is lower. These annuities may pay out a higher income.

Please note, annuity rates can go down as well as up, there is no guarantee that delaying taking an annuity will result in you receiving a higher rate than you would have received at an earlier age and you also need to consider the income you will have missed out on by not purchasing an annuity earlier.

The income from an annuity is taxable, so before you decide which retirement option to take, you'll need to consider your personal circumstances.

The annuity provider will be sent your tax code by HMRC and your annuity will be paid to you net of income tax - just like income is paid by an employer.

Your annuity income will stop when you die unless there is any guarantee period outstanding or you opted for a spouses pension when you took the annuity out.