Finance and investment management is not something that is frequently taught in schools nor do you usually learn it on the job. Yet, it is one the most important processes that will determine the quality of life you will enjoy post retirement.
People are living longer today than ever before and this means that you need to plan your retired life much in advance. Many people like to invest in annuities as they offer a regular source of income post retirement. There many forms of these financial instruments and you would need to choose one based on your finances and your lifestyle.
If you want immediate annuities explained to you, then in lay man terms it means that you invest a lump sum, which is usually a onetime payment, and will begin to receive income from your investment soon after.
Unlike the deferred annuities you don’t have to wait for years to receive your money. Many financial advisers recommend fixed annuities as you are assured a fixed income for life.
If you are thinking about becoming an annuity buyer then the immediate annuities are ideal for people who have a large sum of money to invest and also want to gain from good tax planning. The income that one would receive from a fixed immediate annuity is tax free and in other instances taxed rather favorably.
If you haven’t invested in annuities during your working life you may choose to buy an immediate annuity post retirement. You can choose a ‘life only’ payout, wherein you will continue to receive the fixed income for as long as you live.
You also have the alternative of selecting a ‘life income with lump sum refund’ option. In this case after your death your heirs will receive the lump sum amount.
It is crucial that you consider your personal financial requirements today and as you foresee them in the future before you make an investment. Once you buy an immediate annuity the contract is virtually irrevocable. Thus, it is important that you speak to a few insurance companies, receive quotes and consider the fees and conditions before you make up your mind. Also see this post for more information.
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