Consider An Annuity Policy for Your Retirement
It seems that the annuity policies that were not popular during the 90s are now being seen as a good alternative for at least part of your savings to fund your retirement.
What is an annuity policy? Basically, you pay in a lump sum, and in exchange get an income either monthly, quarterly or annually, for either a set number of years or for the rest of your life. This payout might be fixed or it might be variable depending on portfolio performance - you can choose.
What are the advantages of an annuity policy? Security. You know how much you’ll get and for how long (possibly forever, and if you live to a particularly ripe old age, this is a real bonus). You can also add on particular options that you might find attractive - for example you could get a higher payment if you become disabled or need care. And for other additional fees you are also able to protect yourself against any negative investment performance.
And what are the downsides of an annuity policy? Some of the added extras can cost quite a bit, so do your calcuations carefully and decide if the payoff is worth the extra cost. And the obvious downside, although nobody wants to talk about it, is if you don’t live very long, you don’t get a very good deal.
This entry was posted on Monday, November 17th, 2008 at 4:46 am and is filed under Retirement. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
