Planning for your retirement can be riddled with uncertainties and misinformation about different routes you can take to ensure stable income in your later years. If you’re looking to invest in a plan immediately that will provide assured returns, investing your money in a top annuity plan can do that for you.
What is a Lifetime Annuity?
An annuity is a contractual obligation between you and an insurance company that can aid you in receiving a regular income after retirement depending on your previous investments. It can be a supplement retirement income that adds to your Social Security payments, company pension funds, and so on. A lifetime annuity plan is designed to meet your long-term retirement plans.
Lifetime income is calculated considering the number of months between your current age and your life expectancy age. If you are currently 60 and your life expectancy is 80, your payment is divided into 240 equal installments.
However, the plan will continue to pay regular income to you even when your principal amount has been exhausted.
If you have just begun your career, your retirement is still quite a way off. In such cases, you are better suited to invest money in a deferred annuity plan since you do not need regular pension payments while you’re receiving monthly income from your job.
If your retirement is scheduled to occur in ten to fifteen years, you may have to start making higher payments as compared to individuals who’ve invested in an annuity plan earlier in their lives.
Depending on your familial situation, you may be seeking coverage for yourself only or for your partner as well. If you are only getting an annuity plan for your life, you can invest in a plan aimed at single men/women.
If you want your partner to be eligible to receive payments after your passing, you can subscribe to a joint life lifetime annuity plan. This ensures the same payout as you would receive but to your partner instead.
In most cases, a single life annuity plan can offer higher income to you upon retirement compared to joint-life annuity plans.
Lump-Sum vs. Periodic Installments
All top annuity plans are highly customizable, which lets you pay as much or as little as you want over time. This affects the payout you receive upon your retirement age too.
You can pay a lump sum installment towards your lifetime annuity plan or pay regular installments monthly, quarterly, or annually towards the plan.
Average Annual Income Upon Retirement
Several factors affect the periodic payments you will receive from your lifetime annuity plan upon retirement.
- How much and how regular your contributions to the plan were
- Guaranteed Rate of Return
- Commission Fees (if there are any)
- Prevailing interest rates (at the time when you began the plan)
Depending on these factors, your average income after retirement will be different. You can find this out beforehand by consulting with your lifetime annuity provider.
Investing your savings or a portion of your income on a lifetime annuity is a constant long-term process. You must choose the best provider that can safeguard your savings until you start receiving payouts.
Research the financial position of your provider beforehand or browse through websites that compare different providers for you. You want to ensure that your annuity provider can cover any liabilities or unforeseen risks to protect your retirement income.
You can also look at the rating given to the company by different rating websites to get a concrete idea of its financial standing.
Select the Top Annuity Plan that Ensures a Peaceful Retirement
Amid so many retirement options and attractive investment vehicles, you should choose to protect a portion of your savings through lifetime annuity plans that can give you a guaranteed income upon your retirement.
Annuity plans don’t require you to watch out for market changes or worry about your savings disappearing. It is an excellent option for those who want to put their money someplace safe without additional stress.
If you have an emergency and require a partial withdrawal from your annuity plan, your provider may penalize or charge additionally. Check beforehand what options are available to you if you need an emergency partial withdrawal from your plan.
Looking at the history of your annuity provider and analyzing your savings currently will give you a precise idea of how much you can put in your lifetime annuity plan.
With the right research and strategizing, you can determine the best time and age for you to start your lifetime annuity plan to get the highest payouts.
Also read: How to Make the Most of Your Retirement