When preparing for retirement it is important to consider both the amount you have put away in savings and the income stream you will receive. Living from day to day requires enough money to pay the bills, eat, and enjoy your retirement.
When it comes to an income stream traditionally there are three sources: social security, pensions, and savings. But how can your savings be turned into a reliable income stream? And how can you make sure that this income stream won’t dry up and leave you without enough money to live?
Annuities provide an option that addresses these needs. Annuities provide a guaranteed lifetime income option that will pay out a certain amount for as long as the policy holder lives. This offers many advantages:
Annuities are provided by insurance companies and are low-risk investments. Insurance companies are highly regulated and are required to maintain reserves to guarantee payment to policy holders. Annuity payment amounts are carefully calculated to make sure that these payments can continue for the entire lifetime of the annuitant (the person the policy is on). A guaranteed lifetime income policy is a very safe and secure investment.
* Lifetime Income
The purpose of taking out this policy is to guarantee an income for as long as the annuitant lives. The income payments will arrive regularly and provide a guaranteed income stream. You will never outlive your income. The greatest benefit of this is that you don’t have to try to guess how long your money will need to last. No matter how long you live your income will continue to flow from this product.
* Income options
A guaranteed lifetime income policy offers many options for your income. You can adjust how often you receive payment, and when you take out the policy you have several options that will effect your income. You may take out policies that will even continue to pay your beneficiaries after you pass away. Some policies will allow for more than one annuitant; income will continue as long as either person is alive. There are policies that guarantee to pay for five years, ten years, fifteen years… or as long at the annuitant lives, whichever is longer. There are also policies that will increase your payout rate over time to combat inflation.
There are many options that will adjust the amount of income that you will receive, and can be adjusted by you to make sure that you get the benefits you are looking for.
* Death benefits
While annuity guaranteed lifetime income products shouldn’t be bought for the death benefits, there are policies that you can purchase that will provide them. If the policy you purchased provides a guaranteed amount of time that the payments will be made and you pass away prior to that, the remaining payments will be paid to your beneficiary.
There are also options that provide a lump sum payment at death to your beneficiary. This option must generally be purchased when the policy is first written. In some cases as much as 50% of your original policy amount can be passed to your beneficiary upon death.
Annuities offer guaranteed lifetime income products as a way to help you prepare for retirement and insure that your income lasts at least as long as you do. These are excellent products that should make up part of your retirement plan. But they should not be the only thing you rely upon. Retirement involves many costs and you have many options with how to deal with your money. Consult a retirement planner with questions specific to your needs. A guaranteed lifetime income product may be exactly what you are missing.