Annuity Payout Options
One of the most common concerns for retirees is that they may run out of savings before the end of their retirement. No matter how hard you've worked over your lifetime and how much you've saved, you might still be anxious and worried that you don't have enough to get through your entire retirement years comfortably. Adding annuities to your financial plan can alleviate some of this worry by providing you with a steady stream of income as long as you are alive and in some cases, as long as your beneficiaries are alive.
When you have an annuity, you are guaranteed payments from the insurance company you work with for the full length of your life - regardless of what your age is when you retire and when you pass on. Ultimately, these serve as capital for your retirement years.
Here are the different annuity payout options to keep in mind:
Income for Guaranteed Period Annuity
This type of annuity is also known as a "period certain annuity". With this agreement, you are guaranteed a specific amount for a set number of years. If you end up passing on before this period is over, the amount will be passed on to your beneficiary.
Lump Sum Payment
You can receive your annuity payment as a lump sum and just put it into a savings account (or spend it). This can be a convenient option for those who are very good with managing their money and you are free to share it with your beneficiaries or anyone else.
Joint and Survivor Annuities
If you want to make sure your spouse or a beneficiary will be financially secure upon your passing, you can request a joint annuity where payments are made for life for you and the beneficiary.
Life Annuity with Refund Option
This annuity payout option is similar to the income for guaranteed period annuity except that the beneficiaries receive an amount that is equal to the difference between the accumulated value of the annuity before the payout at the time of your death, and the total benefits received.
Interest-Only Annuities
With this payout arrangement, you earn interest on the value of your account and have the option to withdraw funds from the account as you wish. You can withdraw this as a lump sum payment whenever you want; this option can give you some more flexibility.
Fixed Annuities
This is one of the least popular payout options because the benefits amount doesn't change. You get to choose how much the benefit amount will be and this is broken down based on the length of time the benefits will be paid out.
Sources:
CNNMoney - Ultimate Guide to Retirement
TotalReturnAnnuities.com - A Basic Lesson in Immediate Annuities
Published by Sabah Karimi - Featured Contributor in Beauty, Travel and Lifestyle
Sabah Karimi is a Featured Contributor in Beauty, Travel, and Lifestyle. She writes beauty, style, luxury travel, fitness, wellness, food and wine, and personal finance content for several Y! channels. She i... View profile
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Post a CommentLove this... :o)
This is a major concern for retirees. In fact, a lot of the people who have retired are going back to work and others see no chance of retiring in the future. It's sad, however, my mother and father never thought of retiring. My mother stopped working in one place and started her own businesses. She worked until she just could not work any longer. For some in the African American community years ago, retirement was not even a word in our vocabulary. I was able to retire by the Grace of God at the age of 56. It's not easy, believe me. But God is tooooooooooo good to complain and I keep going.