Retirement Planning With Annuities–Options When Using An Annuity For Payments During Retirement

Many individuals who are seeking out methods to plan for their retirement typically have some form of investment through either a 401(k) plan or an IRA, but options like annuities are also a popular product which consumers have used to begin planning for their retirement as these types of retirement investment vehicles can be used for a steady source of income to individuals after they retire. Obviously, there are numerous choices when it comes to planning for retirement, but annuities have given investors the option to receive payments over a set period of time which can be helpful when expenses arise later in life after an investor has retired.

Essentially, someone who invests in an annuity will make a payment to a financial institution and after an agreed-upon time, an investor will begin receiving payments at a future date which can be either short-term or long-term in their duration. Usually, investors will receive either a monthly payment or they may opt for quarterly or yearly payments, as well. Again, these payment opportunities can be granted to an investor depending upon the length of their payment which is chosen, as some men and women ask for these payments to be doled out over a few years while others look for payments to be given in intervals for the rest of their life. Obviously though, these factors can also determine the amount of an investor’s payment.

In many cases, investors will either opt for a deferred annuity or an immediate annuity plan as a way to begin collecting payments or delay payments until they have retired. The deferred annuity allows an investor to begin contributing money until a time where they began taking these withdrawals, which again is usually after they have retired, but there are also opportunities for investors to take advantage of an immediate annuity, which can allow for payments to be received by an investor after their first investment. While these options can be beneficial for different individuals, when it comes to retirement planning, those who are not nearing their age of retirement typically will defer their annuity payout so as the funds they contribute will be able to grow over time.

While annuities may be an excellent investment for some, there are also benefits from this type of retirement investing as individuals are not limited on the amount of money they can contribute each year, which is not the case for other retirement investment plans, yet there are those who feel that investing in annuities needs to be done with caution as there are some fees which could create financial strain in the life of an investor. Obviously, there are fees which must be paid for most types of retirement account, but with annuities there are typically commission fees and, as with 401(k)s or IRAs, fees may be a paid if money is withdrawn from an annuity early.

Again, there are numerous forms of retirement planning investment opportunities which may be used, like 401(k)s from one’s employer or popular Roth IRA plans, but annuities are another way which many individuals have used to begin securing some sort of financial safety net for when they retire and will need a stable source of income. While annuities may be helpful for some, they do offer both pros and cons for investors and, depending upon one’s situation, could be beneficial for retirement planning or may be unhelpful in the long run. Yet, since many advisers often suggest that consumers diversify their retirement plans, annuities are yet another route which can be used for investors to find security when they retire.