The main goal of retirement planning is to secure long-term income, beyond your working years. Annuities are a great income stream that you can rely on, yet they are sometimes overlooked as an option. If you are in the process of building a solid plan for your future, here are some of the helpful details about annuities that you should keep in mind.
You Have to Commit
Few retirement investments offer the level of security as an annuity, as it comes with a lifetime payout. However, there is some hard work and sacrifice that goes into such a benefit. To get the most from this option, you need to save and invest a considerable amount of money; typically, at least $100,000.
If you don't have a savers' mindset or have the income to support this level of savings, you will not get the most from this retirement investment option. So, make sure you are ready to commit if you plan to rely solely on this option for your retirement income.
The Money Is Protected
Annuities are typically protected with a form of insurance to safeguard investors from insurer insolvency, such as if the company you have invested with goes out of business. This benefit is not one that is often extended to people who rely on some other investment options.
In the event of this type of scenario, this guaranty will return a portion of your money, depending on the limits set forth within your state. The protection can often safeguard your money from unscrupulous behavior, such as fraud. However, again, the limits vary between states, so make sure you familiarize yourself with the guidelines within your state to ensure you're informed.
Know What You Want
If you decide to go this route, you must know what you want ahead of time. The reason for this is that not all annuities are the same. For example, you can purchase an annuity that has a fixed income payout. With this option, you will be paid a set amount of money, over a set time, such as $1500 every month, after the age of 65.
Another option is a variable payment plan. With this option, your payments vary based on the market, so when the market rises, your set payments increase, and the opposite occurs when the market falls. Neither option is necessarily better than the other, but you need to assess your financial situation to determine what's right for you.
Retirement planning is very important, so it's essential that you get it right. It's always a good idea to consultant with a financial group for further assistance.