Immediate Annuities- A Classic, Ready For Your Retirement Income Planning Needs

Immediate Annuities

You may be surprised to learn this, but if you wait to buy immediate annuities until you are over 75 you will maximize your money.
The product that facilitates this is are regular old immediate annuities.  You pay a premium to an insurance company in exchange for a monthly payment of a specific amount for the remainder of your life.  As interest rates have declined in recent years, immediate annuities have not been as popular; however they still provide a safe and consistent income.  It’s like insurance for your money and is a key component of effective retirement income planning.

Because of falling interest rates, waiting until you are over 75 to purchase an immediate annuity will provide you with the biggest returns.  This is due to the calculation factor of your expected life span- We like to call it the Mortality credit, but that is a bit of a morbid term isn’t it?

Annuity payments are calculated based on many factors, one of these being life expectancy, or mortality credits.  For instance, someone who is in their 70’s will not be predicted to live as long as someone in their 60s.  Thus, monthly payments will be higher for the person in their 70s since the insurance company will not foresee paying that individual for a long period of time.

Immediate Annuities: Calculations and Payout

One insurance company’s calculations for immediate annuities compared a $100,000 premium payment for a 65 year old man versus a 75 year old man.  The payout for the 65 year old was $7,740 annually.  For the 75 year old it was $10,068 annually.  To really maximize returns, an 85 year old male could realize a payout of $14,688 per year.
So if you are in good health and can delay income payments, it may be worth it to wait until you are over 75.  The downside of waiting, of course, is that when you do die, all benefits die with you.  You must weigh the risks and benefits of waiting for yourself to buy immediate annuities

Another aspect to take into consideration is that interest rates will probably begin increasing soon.  The Fed has infused vast amounts of cash into the markets and that cash is still there, and commodities prices are fluctuating and rising as a result of the inflationary forces at work on the dollar.  We could easily experience inflation and higher interest rates when the economy picks up.  Thus, you may want to wait for interest rates to increase before purchasing a immediate annuities so you can realize higher returns.

A solution to these what ifs would be to purchase an immediate annuity with a guaranteed payment for a set number of years, 5-10 years.  With this annuity, if you die during the specified time period your heirs would still collect the monthly income payments.  If you outlive the time period, you can re-invest in a new annuity at an older age and may very well take home more per month.

Immediate Annuities: Research and Advice

Immediate annuities should be properly researched before purchasing.  Different insurance companies will offer different terms and it is to your advantage to comparison shop.  The advisors at AnnuityStraightTalk.com can assist with your immediate annuities requirement.