We are all working toward a comfortable, financially stable retirement. We want to enjoy more time with our loved ones while immersing ourselves in the activities that bring us peace and joy. The Hyers & Associates team is here to help you achieve your retirement goals.
The fact is you need a plan to create a reliable income stream to support your lifestyle during your retirement years. You want to wake up each day knowing you have a solid foundation in place that provides regular income. One way to facilitate your dream is to buy an immediate annuity.
What is an Immediate Annuity?
An immediate annuity is a way of ensuring a regular income throughout your retirement years. An immediate annuity is usually purchased in a lump sum – and then an agreed upon amount is paid out when you’re ready. Essentially it acts like a pension plan, supplementing your other income.
Your investment grows while in deferral and with some accounts, your income can increase each year. There are several different ways to establish your personal income stream. One size does not fit all. We’ll help you find the plan that best accomplishes your financial goals.
The insurance is that you will have a set income guaranteed by the policy. The insurance company will look at the type of annuity policy being purchased, the term and the person’s life expectancy. Based on those factors and others, your chosen insurance company will issue you a check for the agreed upon amount for the agreed amount of time.
Things to Consider With An Immediate Annuity
There are several factors to consider when shopping for and purchasing an immediate annuity account. Are you looking for the highest payout immediately? Or would you rather have a lower payout for a longer period of time? Is the income just for you or for your spouse as well? Are survivorship benefits important beyond you and/or your spouse? Do you want the income to have the ability to grow or even double for long term care expenses? These products can be tailored in several ways.
With income annuities, you can choose to have an agreed upon fixed amount paid regularly, a guaranteed payout over the contract, or a payout based on certain stock market indexes. A policy that moves with inflation will generally pay out less initially than one with a guaranteed amount. Plans that pay income to spouses or have survivorship benefits will usually pay less up front as well.
When purchasing your policy, you will choose how long your income lasts. It can be a fixed number of years or for your entire life. Your income can begin after only one month or it can be postponed (deferred income annuity) for several years in order to grow your investment – and returns.
When considering an immediate annuity contract, most insurance companies show you the payout rate. The payout rate is not the same as the yield or rate of return. Your rate of return can vary depending on how long you live. That being said, it’s easy to compare the payout streams of several different companies at once. This will allow you to see who’s offering the best rates.
Making a Commitment
One important note: It can be difficult if you change your mind after purchasing an immediate annuity. You need to think of this as a commitment to gain a guaranteed income in your retirement years. There are few contingencies for a change of heart further down the road. You may be able to change when your payouts begin, but it’s often not possible to get a return of your initial premium back in a lump sum.
Several policies will provide flexibility in your income start date, but this is along term investment for your future. It’s a very smart way to supplement your other investments. If the market takes a turn for the worse, or interest rates drop further, you will still have a significant income stream to rely on to fund all the things you want to do in retirement.
Call Us For More Information
The Hyers & Associates team members are available to discuss annuities and which types might fit your needs best. Planning and considering your financial goals is the important part of making your retirement happen. Contact us today so we can get started on your future income quote.