Retirement Plans and Annuities


If you are planning to live in a stress free environment after retire, you should make sure that you have enough money to sustain such a lifestyle after retirement. You may already have the traditional retirement accounts that others have, such as a 401K plan and an IRA plan. Although these will be very helpful in the future, you do not have any guarantees that you will not run out of money a few years after your retirement. If you worry about running out of money after retirement, you should consider an annuity retirement option as a part of your financial plan. When you use annuities as a part of your retirement financial plan, you get to enjoy the fact that you will not run out of money. There is a guaranteed monthly payment involved for the rest of your life. By purchasing a single premium deferred annuity with the lifetime payout option, you get to enjoy this guarantee.

Single Premium Deferred Annuities

Single premium deferred annuities work just as the name describes. You make a single payment into the annuity. Your lifetime payout will be deferred for a short period. The deferral period is also known as the accumulation period. During this accumulation period, the annuity company will invest the money and the single premium that you made will grow over the years. Of course, it will only grow based on the risk tolerance that you choose. When the accumulation ends, your guaranteed lifetime payout will begin.

Annuity Payout Options

Depending on how your annuity is structured and when you purchased the annuity, you may not be able to distribute the remaining balance to your beneficiaries if something were to happen to you after the payment begins.

Although this may be considered as a drawback, there is no doubt that avoiding this option gives you a higher payout. Avoiding this option also best suits men and women who do not care about distributing his or her assets to any beneficiaries. In fact, the annuity company may end up paying you more payments than what your annuity was actually worth. This is especially the case if you happen to outlive the first premium and growth expectation.

Annuity payments are relatively flexible. It is important for you to pick an annuity company that is dedicated to suiting your needs. Pick payment plans that work best for you. For example, your monthly annuity payout will be decreased if you choose death benefit options. Although you will be gauranteed a payout amount to your beneficiaries if something happens to you, you should make sure that you can afford a lower monthly payout amount.

If you are married, you can take advantage of the “joint and last survivor” annuity payment option. If you take advantage of this plan, the surviving spouse will continue to receive annuity payments after one spouse passes away. This option also lowers your monthly annuity payout.

Another annuity payment option that could possibly affect your monthly annuity payout is the period certain annuity payment option. When you choose this option, you get to enjoy annuity payments that are gauranteed for a certain amount of time. For example, you do not have to worry about annuity payments for ten years after you begin to receive payment.

Consider Your Options before Getting an Annuity Plan

It is very important for you to study your retirement plan before you decide to put an annuity plan into your financial plan. In addition, you should work with your financial planner before making a decision. This is because your financial planner can help you figure out if you need an annuity plan. Your financial planner will determine your income before an annuity plan and after an annuity plan.

You should also consider the consequences of withdrawing from your annuity plan before it has finished its accumulation phase. You could end up paying penalties and experiencing lower payouts.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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