As you read in our last two blogs about annuities, we are going to continue talking about the different types that someone that is planning for retirement could choose from. The understanding we’ve gathered about annuities is that they are a type of retirement plan that guarantees income for the years to come. That income goes untaxed, and then is taxed when the funds are dispersed. Now that we’ve covered that, we are going to let you in on some information about immediate annuities. Here’s what you need to know:
- To get this type of annuity you must first start with a lump sum. The lump sum will get you a contract with an insurance company, which will give you the guarantee of payouts.
- This amount of money can be adjusted to be guaranteed for life, or less. It can also extend to your spouse.
- When you do receive your payout, there will be several factors involved, including the amount you paid for the contract, as well as the interest rates at the time of that contract purchase.
- When choosing an immediate annuity, understand that the other factors involved in your pay out will be your life expectancy, the payout that you choose, and the option that you choose for your payout.
Getting to know your financial planning options is essential for planning for retirement. WIthout the right amount of knowledge, you run the risk of making a bad investment, and could potentially lose money instead. One way to protect yourself from this is by getting advised on your investment choices, by talking to the financial planners at Income For Life.