Fixed Immediate Annuity- Income For Retirement. Image via Wikipedia

When you are looking for a fixed immediate annuity for lifetime income in retirement, safety and consistency are your main concerns. Investment products may scare you because of the risk associated with them. On the other hand a conventional pension annuity may not bring in enough income. One of the most important things you can ask for in retirement is a consistent and secure monthly income that you can rely on. A guaranteed annuity such as a fixed immediate annuity can provide you with that consistent monthly income year after year in your retirement.

The Fixed Immediate Annuity and The Pension

If you have a pension you will need to decide what you will do with the funds as retirement nears. Typically, the company handling the pension fund will contact you trying to sell you a pension annuity. Basically, you are trading in the funds in your pension for steady income in retirement. Based entirely on your age, you may give them $100,000 in exchange for $7,000 a year- this is similar to a fixed immediate annuity, however the products offered by your pension fund manager may not be your best option.

Fortunately, with the options open to you on the open market, you are not required to convert your pension to a fixed immediate annuity administered by the same company who holds the pension fund. This is a common misconception and can cost people thousands of dollars in retirement. You should never take the first deal being offered you, as there are plenty of other products on the market to choose from.

Fixed Immediate Annuity- Other Options

Furthermore, not all annuities that you may be interested in at retirement are fixed immediate annuities, yet this may be your only option from your pension advisor. You can link earnings on annuities to investments in mutual funds- these are variable annuities. You can also link income and appreciation rates to market indexes- these are indexed annuities. There are kinds of annuities for many different retirement and pre-retirement income needs.

Another misconception is that many people believe that to realize any of the gains in the market and grow your money, you must be willing to risk losses and see the balance of your money decrease. This is only the case with certain types of variable annuities, and is not the case in fixed immediate annuities. An immediate fixed annuity will provide guaranteed income for a period of time- generally, it is tied to a person’s life. That person may be you, a spouse, or even a child. In that case, if the investor were to die, the payments would then be converted to their heirs. Set up correctly, a guaranteed, immediate fixed annuity will keep paying you in retirement for your entire lifetime.

This guarantee is the best feature of a immediate fixed annuity. You can stop worrying about stock market fluctuations, knowing your money is secure. You will not outlive your retirement money, and you can rely on steady and consistent monthly payments.

The Fixed Immediate Annuity- Downsides

The only negative of a fixed immediate annuity it its stringency. You cannot move your funds to another annuity if you want to do so. You will not realize additional gains other than what the contract terms spell out. Even if your financial situation changes the terms of a fixed immediate annuity remain the same. So, while a guaranteed annuity is a safe investment, you may want to speak with a financial advisor about deciding which fixed immediate annuity product is best suited for you.