Uses Of A Retirement Annuity
Any time in your life is a good time to start thinking about your retirement
, especially with the recent state of the economy and the worries over Social Security. Many companies that used to provide very nice retirement packages have scaled them back or done away with them altogether. Many factors affect this, from population growth to economic conditions, all causing companies to scale back retirement programs.
That doesn't mean that you don't need to plan for your retirement, and now is the best time to do so. One great way to insure that you get the most from your retirement plan is called a retirement annuity. A retirement annuity is like an insurance policy in that you pay in to it for a set period of time at a set amount, and upon the occurrence of a predetermined event (in this case, your retirement age) the annuity becomes annuitized and you stop paying your premium. The policy then begins to pay you, and based on a variety of factors can be either the backbone of your retirement plan, or a supplement to your retirement pension, 401(k), social security and any other income streams you had planned for your retirement.
How expensive your retirement annuity is, as well as how much is paid to you once you retire, is based on how much risk you're willing to take and the gains on those risks. You can get a low risk annuity which will gain based on an essentially static interest rate, or you can take more risk and allow the money in your annuity to be invested, potentially providing a much higher return. The only problem is that it could also lose money. There's also a kind of middle-ground annuity where some of the money is stored in an interest bearing account, and the rest is invested for higher returns. A higher down payment and larger payments means that you'll have more money gaining more interest faster, as would a lump sum payment.
When choosing a retirement annuity plan, do your research and make sure you choose a knowledgeable company that has had success with their investments and whose employees can professionally and knowledgeably answer all your questions. Make sure when you're speaking to your representatives that you clearly plan your retirement needs:
*What are your monthly bills, and what do you expect them to be when you're retired?
*Plan for health expenses, factoring in your health insurance and any Medicare you may have at the time.
*If possible, try to keep your retirement income at the same level or higher than what you have now.
*Name a beneficiary in the event of your death before the annuity expires, otherwise, the rest of your benefits are forfeit and the company retains them.
A retirement annuity is an excellent tool that you can use for the backbone of your retirement plan or to supplement any other plans you may already have in place. With proper planning and preparation, your retirement can be one of the happiest times of your life, allowing you to do all the things you never had a chance to do during your working years.
by: Carina Smith
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