Retirement Annuities are a form of insurance that pay out income and are used as a means of retirement planning. They are structured in a similar manner to an individual retirement account (IRA).
After investing in the annuity, payments are made to you on a future date or on a number of dates. Retirement annuities can be immediate (paying you an income straight away) or deferred (starting at a date in the future).
Retirement annuity income can be received every month, quarter, year, or in a lump sum. Annual contribution amounts are capped. Joint retirement annuities are an option – this will continue to pay an income until both spouses are deceased.
There are many options with retirement annuities. You have the choice of receiving the payments for the remainder of your life, or for a predetermined number of years.
Fixed Annuity plans offer a guaranteed payout amount. The rate of return is fixed for a prearranged number of years.
Variable annuity plans offer a variable payout amount determined by the performance of the fund’s investments.
Some benefits of retirement annuities are:
- – They offer a tax deferred savings plan
- – They help to protect money already saved
- – Allowance is made for flexible premiums
- – Income is generated for retirement
- – You do not need to learn about investing, it is done for you. This is particularly advantageous when you advance in years and may be less able to make through financial decisions.
- – The annuity can be left to beneficiaries in your will.
- – Peace of mind. You will have less financial worries knowing that you have an income for the rest of your life, even when you are no longer working.
Retirement Annuities are a tax effective means of saving for an income in your retirement. The income from the annuity can be paid in regular installments or in a lump sum. It is never too early or too late to start planning your retirement.