The use of annuities for retirement planning are one of the many options which investors have used as a way to secure their future after they have long left the work force, but when it comes to choosing the type of annuity which is best for one’s particular situation, there are usually those who choose a deferred annuity or others who may opt for an immediate annuity, both of which may bring pros and cons for an investor.
Obviously, annuities are one of the ways which have been used as a method for receiving a somewhat stable income after an man or woman has retired, and if annuities are used along with other retirement investment vehicles a those who plan properly should be able to meet costs, like medical or simple living expenses, without a great deal of difficulty. However, aside from 401(k)s and Roth IRAs, annuities can differ in that an investor can choose when they want to begin collecting these payments and how long they wish to receive payments from their annuity.
Essentially, annuities are an insurance product that allows an investor to receive a steady income and, while they are not limited to retirement, more individuals feel that this can be a helpful investment for their retirement planning. Yet, most individuals who are looking into annuities as a way to save for retirement may opt for a deferred annuity as the money invested here will ideally grow to a point where an investor can benefit greatly from withdrawals later in life.
Yet, there are also those who receive immediate annuities and this option usually begins making payments as soon as an individual makes their first investment. While there are different options for annuity investing and, depending on one’s situation, one option may be better than another, but immediate annuities may only be helpful for those who are nearing retirement as, obviously, they may have less time to accumulate money.
However, investors who may be considering using an annuity for their retirement are usually advised to look at not only options within annuities but alternative retirement options as well due to the fact that diversifying one’s retirement planning and investment will typically be in an individual’s best interest as putting all of your eggs in one basket can cause trouble if problems were to arise. Yet, even when looking for annuity investment options, research may also benefit an investor due to the fact that annuities may have high costs associated with commissions to insurance brokers or annual fees.
For those who wish to have some form of stable income, though, annuities can be a great way which this may be accomplished, but again, this type of retirement planning is not the only option individuals may have and, according to many advisers, should only be one piece of a worker’s retirement planning so as to maximize their retirement savings.