One way to secure a steady flow of income during retirement is to consider annuities. These products can provide you with a feeling of security when money can be quite tight. Here is what you need to know.
What is an Annuity?
An annuity is simply an invested fund that pays out a fixed amount over a specified period of time. To purchase an annuity, you can pay an insurance company a lump sum or monthly premiums.
What are Annuity Payments?
Your annuity payments will be based on your age, your gender, the type of product you’re buying, and the current interest rate. Men get higher payouts than women because women tend to live longer than men.
Two Main Types of Annuities
There are several different types of annuities to consider including:
Fixed Annuities. These annuities provide a set payment each month until you die.
Variable Annuities. These annuities are a bit riskier. If you go this route, you could receive bigger payments if the investments of the annuity fund are doing well. However, if the investments are not doing well, your payments will be lower.
If you’re considering an annuity, shop around for the option that best suits your needs. Annuities can be complicated, so ask an unbiased professional advisor for help. You should also only look into reputable insurers with high ratings. If you go with an unknown company, you could end up with a product that doesn’t fit your needs or is at risk of not paying out. Also, keep in mind that annuities are products that can offer high commissions for salespeople. Make sure you understand what you’re buying and what you’re paying for.