For more than half of aging Americans, there is at least one thing scarier than death. A recent Allianz study found that 60 percent of baby boomers are more fearful of running out of money in retirement than dying. For these Americans, adding a guaranteed source of income during retirement by purchasing an annuity is one easy way to gain peace of mind. However, there are many different types of annuities, and their structure is often relatively complex. Here are seven things every retirement planner needs to know before investing in a lifetime annuity.
- There Are Different Types Of Annuities
Not all annuities are equal, so investors who want guaranteed income for life starting today should make sure to choose an immediate lifetime annuity. Immediate annuities allow investors to make a lump sum payment up front in exchange for immediate and regular (typically monthly) income until death or until a specified date in the future. Other types of annuities, including variable annuities and fixed-index annuities, add a variable rate of return into the equation for investors looking to boost returns based on stock market performance. However, the typical immediate annuity has a fixed rate and payment schedule.
- It’s Easy To Estimate Monthly Payments
For investors curious about how much monthly income they could generate from an immediate annuity, there are plenty of online calculators out there that will provide estimates in just a few seconds. For example, the calculator provided by ImmediateAnnuities.com estimates that a 65-year-old male living in Florida with $200,000 to invest in an immediate annuity could expect between $985 and $1,085 per month in annuity income. Monthly annuity income varies based on principle invested, age, gender and current interest rate. Investors can also boost their monthly income by opting to defer their first month’s income as long as possible.
- Annuity Payments Can Be Passed On To Beneficiaries
Investors who opt for an annuity with a cash refund clause can have any of their remaining principle paid out to a beneficiary in the event of an early death. Annuities with cash refund guarantees typically come with lower monthly guaranteed payments, but they provide an extra bit of insurance against the possibility of an untimely death. The typical 65-year-old annuity investor is anticipating at least a decade worth of retirement. But annuities with cash refunds guarantee that the investor’s principle is not simply lost in the event that he or she dies at age 67.
- Annuity Payments Can Be Immune To Market Swings
Standard fixed-rate annuities have…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
