# Is an immediate Annuity right for you

People are living longer and longer. This means more of life is lived in retirement; so much so that it is now recognized that retirement potentially represents a third of your life.

While most people now understand the need to save for retirement, the sad reality is that with retirement potentially lasting so long people now face the strong possibility that they will outlive their money. After working for years to build up a retirement nest egg it simply may not be enough. And with pensions going away and social security in danger this problem only gets worse.

An immediate annuity is a retirement product designed to provide you with an inexhaustible stream of income during this time. Just like a pension, it provides lifetime income.

An immediate annuity works by taking a lump sum of money that you may have and, using a mathematical formula and your life expectancy, guaranteeing you a regular sum. Basically, you give the insurance company a lump sum of money and in return they will give you X amount for as long as you live.

The older you are and the greater the initial lump sum the higher your regular payments will be.

There are many considerations before deciding that an immediate annuity is right for you however. First, do you need the additional income?

An immediate annuity guarantees you an income stream. If you are not in a position where you must have this income an immediate annuity is not the right product for you!

Is the income sufficient?

The calculation is based on a mathematical formula, don’t expect to be able to deal with the company and get a bigger payout. If the amount they are offering you is still not enough to met your expenses there is no point in purchasing an immediate annuity. Put your money to work elsewhere.

Can you part with the money?

If you put every last dime into an immediate annuity you will have nothing left to cover emergencies and expenses. You will likely never see this money again, this is not a temporary deal with the insurance company. It is true that there are benefit options that will refund the balance of your money to your heirs or provide a death benefit, but in your lifetime these funds are spent and gone.

If you need the income, the annuity provides sufficient income, and you can afford to part with these funds an immediate annuity is right for you. There is no other way to guarantee a lifetime’s income, and other investment options come both without a guarantee and usually with lower payout rates.

If you need retirement income, an immediate annuity may be right for you! Meet with a financial professional to see just how much more income you could be receiving every month.