Planning for retirement involves more than just saving money—it requires a strategy that ensures a steady stream of income when you stop working. Annuities are a popular option for many retirees, providing guaranteed income, tax benefits, and peace of mind. But with so many options available, choosing the right one can be difficult.
In this article, we’ll break down eight expert-approved annuities that can help protect your retirement and ensure financial stability in your later years.
1. Fixed Annuities: Guaranteed Income for Life
Fixed annuities provide predictable, guaranteed income for a fixed period of time or for life. This type of pension is suitable for retirees who want to know exactly how much money they will receive every month. Fixed annuities protect you from market volatility, making them a safe, stable choice.
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2. Instant Annuities: Start Receiving Payments Immediately
Immediate annuities start paying you income immediately after you pay the lump sum. These vehicles are ideal for those who need money quickly.
With predictable payouts and no risk of market volatility, they provide a reliable income stream when you need it most.
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3. Deferred Income Annuities: Delayed Payments for Future Security
Deferred income allows you to start receiving payments later, providing you with income when you’re older. These annuities are great for those who want to ensure long-term financial security.
The longer you wait to start receiving payments, the higher your income may be.
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4. Variable Annuities: A Variable Option With Market Growth Potential
Variable annuities offer a combination of guaranteed income and potential market growth. Your payouts depend on the performance of your chosen investment during the year so you can earn more based on market performance.
Although returns are not guaranteed, variable annuities can be an excellent option for those looking for additional growth potential with some degree of security.
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5. Fixed Index Annuities: Combine Stability and Growth Opportunities
Fixed index annuities offer the stability of fixed annuities with the potential for higher returns based on market index performance.
This type of annuity can be a good option for those who want to protect their principal while still having the opportunity for some growth based on market performance.
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6. Qualified Long Term Contracts (QLACs): Protect Your Future
QLACs are deferred annuities designed to begin paying after an age, such as age 80 or 85. They are a great option for people who want to make sure they don’t outlive their savings.
QLACs appeal to those who have grown their tax-advantaged retirement accounts and want to convert a portion of their savings into guaranteed income later in life.
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7. Income Only: Focus on Income, Not Growth
Income-only annuities focus on providing you with regular income without the intention of growing your savings.
These are ideal for people looking for an easy, reliable source of income for retirement without having to worry about managing investments. With these annuities, your payment is guaranteed for life or a set number of years.
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8. Joint Survivor Annuities: Provide Income for Both You and Your Spouse
Joint and survivor annuities provide continuous income for both you and your spouse for life. If one spouse passes away, the other continues to receive payments, ensuring that both parties are covered.
This is an ideal option for couples who want to provide long-term financial security.
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Choosing the Right Annuity for Your Retirement
With so many pension options, choosing the right one for your retirement goals can be a challenge. It’s important to assess your desired income, risk tolerance, and how long you need your payments to last.
A consultation with a financial advisor can help you explore your options and choose the best annuity for your needs.
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