The Best Income Annuities
The best income annuities are ones that help you achieve your financial goals. Income annuities provide you with money that you need to pay ordinary bills and expenses during retirement. These annuities may be structured one of two ways. Make sure you choose the right income annuity for your needs.
Other People Are Reading
-
Straight Life Annuity
-
A straight life annuity is an annuity policy that converts your savings to annuity payments and makes those payments for a set number of years. The annuity policy terminates when you die. It doesn't matter how long you live. If you live two days and die, the insurer keeps your savings. But, if you live longer than your life expectancy, the insurer keeps making payments until you die.
Temporary Annuity
-
A temporary annuity is an annuity that makes payments for a set number of years. This annuity policy allows for beneficiaries, since you may not outlive the payment period. For example, if you elect to receive this annuity for 10 years, but die in year seven, then the annuity will continue making payments for three more years to a beneficiary.
-
Benefit
-
A lifetime benefit annuity is best when you have no dependents, including a spouse, and you do not have anyone you wish to leave money to. This payment structure allows you to be sure you won't be left destitute if you live a long life. A temporary annuity allows you to receive payments when you want the ability to leave behind a benefit payment to your spouse if you die before the annuity payments stop. Because the payment period is set, the insurer may offer you a higher payment than what would be offered under a lifetime annuity. The higher payment gives you more money, which is also a benefit to you.
Consideration
-
If you choose the wrong annuity, you could end up with either too little money or not enough. Lifetime annuity payments may be lower than the temporary annuity payments, since the insurer must factor in the possibility that you outlive your life expectancy. But, temporary annuities could leave you without any income at all if you outlive the payment period. Regardless of the annuity type, you will receive more money the older you are when you start the annuity. So, starting annuity payments at age 70 will produce more income than annuity payments starting at age 60.
-
