An income annuity helps to protect against the possibility of outliving your monthly savings. It’s true that most of us are bound to our jobs for the rest of our lives. And if you happen to lose your job, or if your employer decides to lay off you, then you could be left without any source of income at all. But an income annuity can prevent this from happening. Whatever you save over the years is protected by an income-annuity, no matter what happens to the value of your savings in the future.
You may also qualify for an immediate annuity if you’ve saved for a college education or a similar endeavor. Even if you never have a college degree, you may still qualify for an immediate annuity based on your savings history. You will get this money when you reach a certain age, usually 65.
You may also qualify for an income annuity if you’ve been saving for some type of business investment. Many people use their retirement savings as investments for the future. So you could be eligible for an income annuity if you’ve done things like buy real estate, collectibles, or bonds. If you have a high level of income now, but low monthly income because you’re retired, then you could get a higher income annuity than you would have otherwise.
You may also benefit from an income annuity if you’ve completed several important goals in your life. Many people set aside money each year for retirement. If you’ve saved enough money over the years, then it’s possible to use that money to help you with your retirement. You may want to have more income payments throughout your life, so you can build up some additional savings to use for those payments.
You might want to consider an income annuity if you’ve reached a point in your life where you are no longer able to keep up with your regular retirement savings because of one reason or another. Perhaps you lost your job, became disabled, had an accident, or suffered an injury. If this is the case, then you might want to consider getting an income annuity. Depending on your specific situation, there might not be any other option. But keep in mind that even if you’ve reached retirement age, you can always withdraw some of your retirement savings at any time without having to wait a long time before you’ll get your annuities.
With income annuities, the way you save can vary depending on how much of your regular monthly income stream is used to fund your investments. For example, some people will take the lump sum they get from retirement accounts and put it all into a single high interest savings account, while others might decide to save in several small amounts over a number of years until they have their annuities set up. There are tax advantages to doing either of these things, as well, so you should investigate them carefully. Just remember that any money you withdraw from your annuities should be paid directly to the insurance company that holds your contract.
Here’s a more hypothetical example. Say you’re getting ready to retire and you’ve already saved enough money from your regular income annuity to cover a standard rate of return on your investment, in case you need the money right away. The question is, what do you do if, in a few years when you could possibly need to withdraw a percentage of your original amount, the insurance company you’ve chosen to maintain your annuity contract won’t accept your returns? If this happens, you’ll end up with a negative income annuity account.
The answer to this potential problem lies in having either a term or a universal annuity. A term policy pays your fixed amount of income for a specified time period, such as a year or five years. A universal annuity, on the other hand, will pay your fixed monthly income over an indefinite period of time. Because the annuitant has the option of withdrawing at any time, many people prefer to have both types of policies. However, most people also realize that the value of both kinds of policies is the same, and the main issue is simply choosing the best financial product for their particular situation.