An Annuity is a contract with a life insurance company with the purpose of distributing guaranteed income for life during retirement. There are a variety of them that serve different needs.*
Benefits of an Annuity
Protection of your money
Guaranteed income for life during retirement
You can leave a benefit for your beneficiaries if you pass away
It's pretty customizable!
Things to be aware of when it comes to Annuities:
It's not usually liquid or easy to access if you need the money
Not best for short term goals most of the time
Consult a professional that can offer a variety of companies to choose from so they can tailor the solution for your needs
Watch out for fees, it isn't necessarily a bad thing, just make sure to know what they are first and that it fits your goals and needs
Immediate Annuity
It's not usually liquid or easy to access if you need the money
Not best for short term goals most of the time
Consult a professional that can offer a variety of companies to choose from so they can tailor the solution for your needs
Watch out for fees, it isn't necessarily a bad thing, just make sure to know what they are first and that it fits your goals and needs
Deferred Annuity
This is for someone who is looking to accumulate retirement income and to turn it into an income stream during retirement. This would not be for someone who wants to start taking income right away.
How do I fund them?
Typically with periodic payments called premiums (multiple-times) or a lump sum premium (one-time).
How do I take income when I am ready?
Usually you let the insurance company know and they may have a form to fill out. A more specific answer would be based on what the company requires. Ask your financial professional for more information on this.
Summary
An annuity could be a great solution to a retirement strategy. Consult a financial professional to see if an annuity makes sense for you.
Have questions?
*For education purposes only. This is not financial, legal or tax advice. Consult the appropriate professional before implementing a strategy to make sure you find the right solution for your specific needs.