Annuities help manage your income during retirement. Invest your money wisely so that can have a guaranteed income for the rest of your life.
- Annuities help supplement income during retirement.
- They offer the choice of a guaranteed income for life.
- Payments can be received over a specific time period, in a lump sum or in guaranteed payments for the rest of your life.
- Fixed annuities offer tax-deferred savings. You can purchase an annuity with a guaranteed interest rate for 3 years up to 10 years. Also, fixed annuities can offer interest rates that vary with market performance. However, none of your money is in the stock market. You will not lose any principal with fixed annuities. If you are not a gambler, but rather feel the return of your principal is more important than the return on your principal, you need to take a look at fixed annuities.
This type of investment plan is designed to help provide an income for retirement. Therefore, these investments are planned contracts between an Insurance Company and you, the investor. Unlike other retirement plans, annuities do not involve banks, investment companies, or other third parties. Furthermore, these investments are sometimes casually described as “pensions that you buy.” This is an effective and simple way of describing the fact that annuities are retirement investments. Hence, you purchase them early in life in order to receive payouts later in life.
Purchasing an Annuity
There are two primary ways to get an annuity. The first way involves making a large, lump-sum payment to an insurance company. and the second way involves paying on a regular basis, which could be monthly or quarterly. Payments are typically once a month, but different contracts can be created on a case by case basis.
Then, when you are finally ready to retire, you can switch your investment from its accumulation — or pay in the period — to the payout period. In some cases, you will be eligible to receive regular payouts for the rest of your life. You can potentially even extend those annuity payouts to a legally designated beneficiary.