The retirement period is never a time to jostle for work and engagements. It’s indeed a period of rest from active service. You can make the most out of the period if you already had streams of income in place prior to your retirement. You can always make this happen when you go for annuity for retirement.
In simple terms, annuity for retirement is a unique insurance product or policy that pays out a specified amount of income which is normally used for retirement purposes. It’s usually the best option for investors who are expecting to enjoy steady pool of income when they retire from active service.
Annuity for retirement works in a unique and systematic way. You’re expected to make an express investment in the annuity. Then, the investment will begin to make payments to you in future either on a specified date or on a series of specified dates. The income you make from the investment can be paid to you on monthly, quarterly or annual bases. It usually comes as a lump sum of cash, which you can use to enjoy your retirement period. You can equally invest the cash in something worthwhile.
Basically, the size of the payment you’re going to be receiving is highly dependent on several factors. The length of your payment period matters a lot here. The kind of annuity for retirement you choose also matters a lot as well. You can decide to receive the payments for a certain number of years or for the rest of your life as well. You can choose to go for the fixed annuity that comes with a guaranteed payout. You may also decide to go for variable annuity, which is determined by the performance of your annuity investment.
Annuity for retirement offers you many benefits when you go for the right type. It can serve as a vital retirement planning tool which guarantees enough cash for your retirement period.
Some annuities are tax-deferred. You’re not expected to pay any dime of tax from the accumulating income you make. However, you may be asked to pay tax when you plan to withdraw some kinds of annuities. Annuities guarantee rates of return on the cash you invest. You can also enjoy guaranteed lifetime payments if you apply for the option.
It’s important you know that the bulk of benefits that come with annuity for retirement depends largely on the type of annuity you go for. There are two major types of annuities. They include deferred and immediate annuities. Your money is invested for a specified period of time when you go for a deferred annuity. You’re not going to touch it until it’s ripe for withdrawals. On the other hand, immediate annuity gives you the option of receiving payments soon after you make your first investment. Hence, while immediate annuity pays out regularly, deferred annuity allows the money to accumulate until the specified payout day is reached.
Again, annuity for retirement can also be categorized into variable or fixed annuities. This depends on whether the payout is a fixed sum or attached to the performance of the investment you make.
One thing is sure; you’ll always have a lot to gain from annuities when you make the right investment. You’re sure of gaining more if you end up dealing the annuity business with a reliable insurance company that offers the best of options.