Do-it-yourself pensions – Are immediate annuities the best life insurance products?
According to most recent researches, the Americans are living longer than ever. Though the idea of longer life is applicable to all of us, but when it comes to living a financially fit life, in most cases it is seen that the tradeoff is outliving all your retirement savings. As the health care costs in the US have risen out of control, most people are checking their insurance coverage, both health insurance and life insurance coverage. With the crippling costs of health care and the constant rise in inflation within the nation, you can get hold of a single premium immediate annuity (SPIA) as this may be a helpful income stream for all those who outlive their peers.
Though it seems that the pensions will be going off very soon, but if the retirees are looking for ways to substitute their retirement money, they can investigate the immediate annuities. All such insurance products are immediately expected to grow in popularity as the number of the traditional pensions will diminish in number. If you purchase an immediate annuity, it is almost like a monthly pension check. You just have to pay a lump sum to the annuity provider and in exchange of that he will provide you with a guaranteed income stream. These monthly payments will start off immediately 30 days after you’ve paid them that money.
Some important characteristics of immediate annuities
An immediate annuity is the way in which they can convert a small portion of your retirement fund into a steady income that will last as long as you may do. Have a look at some of the characteristics of immediate annuities.
* A single steady payment throughout your life: If you’re anxious thinking that you may live longer than your money, you can shrug off such tension if you get yourself immediate annuities. In exchange of a lump sum amount of money, you can get a steady income throughout your life.
* A simple strategy: The company that provides you with the annuity will thereby handle all the responsibilities of the investment and make sure that the correct decisions are being taken with your money.
* They’re low risk instruments: If you’re worried about the security of the funds, you can be sure that they are. The provider of the annuity is always financially secure and the funds are guaranteed by the assets of the company. You don’t even have to worry about any kind of fluctuations due to the vagaries of the financial markets.
* There are tax breaks: While funding them, if you’re using the tax-deferred instruments, you only pay the taxes on the monthly checks that you receive rather than the lump sum amount of money.
Before you purchase an immediate annuity, make sure you explore all the other alternatives like retirement income funds, total return portfolio or something like laddered bonds. Always see that you make the best choice to support your retirement years so that you don’t fall in trouble. This can be a good insurance instrument or financial investment through which you can earn a steady income.