Make Annuities Work for Retirement
As the age of retirement approaches, you could be one of the many people who are concerned that benefits from the 401(k) plan are not sufficient. The escalating cost of living is a motivation to seek different ways to make available money work for you. Although Annuities appear the safest option, they are usually seen to be complicated, which does create in some instances, customer reluctance.
With an Annuity retirement policy, you are assured that you will not outlive your income. However, the 401(k) plan depends on the type of Annuity, where the investments are placed and what options are available to you relative to your Annuity plan. With a fixed Annuity, payments start immediately, whereas a deferred type begins at a selected future point.
Financial flexibility is an important factor and a 401(k) plan can be adjusted should it be required, to the benefit of its participants. A variable Annuity depends on the performance of the fund and can be structured relative to a guaranteed minimum income. In the event of the death of the named beneficiary of a 401(k) plan, for the spouse who remains, it could be a consideration to wait and then invest in an immediate fixed Annuity, should additional income be required.
A further option to consider besides a 401(k) plan is a home equity conversion mortgage, or a reverse mortgage. As with Annuities, this is a method of providing a stream income during your lifetime.
In general with an Annuity, higher is the interest rate used by a provider to calculate your payments, greater is the monthly payment. There are options available that guarantee the total amount of money invested will be returned. This is a concern generated by the fear of a near future demise.