Subscribing to an annuity plan with good annuity rates is one of the best ways to secure your lifestyle upon retirement. It is not really about how much you think you can save or the amount of potential wealth you can build in a lifetime.
It is about the peace of mind that you will have. A secure source of income when you are not anymore working will answer this need.
Retirement may seem to be a very distant prospect. You may be in the prime of your health and career and old age may be something that is just an abstract concept.
You may feel invulnerable and you may have a hint of delusion that you will live forever. Well, now is the best time to plan ahead while you still have the strength and luxury of time.
Time is your best friend if you know how to use it wisely but it can be your worst enemy if you are not very prudent.
Before you know it, all your hair will be grey (assuming you still have hair by that time), you will have a turkey neck, your face will wrinkle and sag, your senses will be diminished, and your memory will not anymore be as sharp.
Simple financial plan
Annuity rates comparisons and computing for the nest egg income that you will need may seem daunting and intimidating. However, at its very core, annuity plans are simple financial instruments that insurance companies offer.
In exchange of a lump sum pension or savings, many insurance companies guarantee lifetime income for retirees. This is a mutually beneficial arrangement.
On one hand, many retirees usually find themselves in a predicament, realizing that their savings or lump sum pension will not be enough to last for the rest of their remaining years. Putting their money in an annuity plan will provide them with financial security.
On the other hand, insurance companies make profits by investing this money in other ventures. Profits are also made in the event that the plan holder dies earlier than expected.
Types of annuity plans
Depending on the need or contingencies, many types of annuity plans are available for clients. The two main types are the deferred annuities and the immediate annuities. The first one can be accumulated over a period of time while one is still working. Hence, it is a form of savings. The second one involves a one-time payment of lump sum money.
To some extent, deferred annuities are very similar to 401(k) or IRA. Investors can pay installment of small amount for several years to build their nest eggs. Meanwhile, immediate annuities take advantage of financial leverage. A sizable amount of money will be used to ‘buy’ a financially secured future. The latter arrangement is ideal for retirees. They may only need to spend certain portion of their total savings, depending on the income they want to receive.
Other types of annuities are fixed annuities, variable annuities and indexed annuities. You may choose the best-suited plan, depending on your age, current income and your future contingencies. It is advisable that you consult a financial expert for this matter.