| Your answer very well might be that a steady stream of predictable income is more important to you than managing a pile of assets.
Where do you look for this critical, guaranteed, retirement cash flow? For the increasingly few, this might be your company’s Pension Plan, but for many others the main source is Social Security. No matter how you feel about Social Security and its ultimate viability, this system still delivers reliable income for millions of retired Americans. However, a big downside to Social Security is that the benefits are limited and more than likely won’t cover all of your retirement income needs.
Annuities might be the solution. An annuity is an investment that can guarantee income for your retirement. There are Fixed, Variable, Indexed and Immediate Annuities, which is the right annuity for you? For now, let’s just discuss the Fixed and Immediate Annuities.
Single Premium Immediate Annuities (SPIAs) are purchased with a single deposit. They usually start making regular monthly payments to you immediately after the date you make that deposit. The key ingredient for an immediate annuity is the exchange which takes place between the insurance company and the buyer. The company promises to pay a monthly income for the life of the annuitant and the buyer gives up his rights to ever receiving his deposit back in a lump sum.
In its simplest form - the Straight Life or Non-refund immediate annuity - payments are guaranteed1 over the lifetime of one person. Given a fixed deposit amount, the monthly payments which derive from a "Life" annuity are always greater than those derived from other forms of immediate annuity, such as the "Life with Period Certain" annuity, or the "Joint and Survivor" annuity. With other more extended forms of annuity, the insurer calculates its risk over a longer period than the one life expectancy, and reduces accordingly the monthly payment amount.
A fixed annuity pays a guaranteed(1) rate of return for a specified length of time. And, throughout the life of the annuity, the issuing insurance company guarantees that the interest rate will not fall below a certain level. This type of annuity is best suited for individuals who seek security and stability. Since the rate of return is fixed, you'll know exactly how much you're earning for a specified period and there's no need to worry about market volatility.
With the current climate of interest rates you might be looking to do better or maybe you currently have an annuity and are unsure of exactly what you own and what rate you are earning. If you have owned it for a number of years it very well could have reached the “floor” rate of 3.00% or 3.50%. If you would like to learn more, please call the Prior Lake State Investment Center at 952-440-0954 for a free consultation.
1- Guarantees based on the claims-paying ability of the issuing insurance company |