Are you close to approaching retirement? If yes then, you must have involved in retirement planning through 401 (k) and other investments. Well, in such situations, what you need to keep in mind is the fact that whether the investment will be able to generate sufficient income for sustaining a living during the post retirement period? If you have been worried over outliving your income then, investing with an income annuity comes up to be the best solution for you.
Income Annuity – What it is all about?
As the name suggests, income annuity refers to the simple idea of receiving monthly payouts for a lifetime against a lump sum amount deposited with an annuity provider or the insurance company, prior to retirement.
The investment policy, in recent years have achieved much recognition in coming up as a potential retirement planning tool. Thanks, to the recommendation from the U.S Treasury department, income annuities today can be used with 401 (k) and Individual retirement Accounts (IRAs). According to LIMRA, the sale of the annuity policy recorded a 6.6 percent increase in 2011.
Purchasing an Income Annuity
Usually, an income annuity should be purchased with a lump sum. These investment policies are designed to offer the retirees with a stable monthly income during the post retirement period. While, buying such investment policy, you can consider utilizing the 401 (k) assets to make the plan more favorable for you. While, purchasing an annuity investment policy, you must always remember to seek the advice of a financial expert for ensuring a safe and secured investment.
Income Entitlement with the Scheme
The income that the investment policy is supposed to generate depends on several factors like, the term period, product price, age of the annuitant (joint annuitant’s age, if any). However, annuitant must remember not to take out the amount, until the age of 591/2, as it involves a penalty charge subjected by the Internal Revenue Service (IRS).
Payouts Offered by the Investment Policy
While, investing with an income annuity, you can consider choosing from a wide range of payout choices, dependent on your interest and specifications. Here, is a look at the payout choices –
* 1-20 Year Period –the insurance company is liable to provide you an income for a specific term period. In case, the annuitant dies before term end then, the monthly payouts are passed on to the beneficiary.
* Certain period + Life – the insurance company is liable to offer you a monthly payout for the specific term and even if you outlive the term period. In case of the death of the annuitant, the monthly benefits will be given to the beneficiary.
* Life Only – the insurance company is liable to offer a monthly payout for life.
Retirees looking forward to investing with a potential pension plan can rely upon an income annuity, eyes closed. The reason is simple; such pension plans and investment policies are designed to offer you a guaranteed flow of income stream for a lifetime.
Author’s bio: Jonathan James holds an interest on anything related to finance and retirement planning. Here, he discusses about investment policies like, income annuity that can help you to live a comfortable and financially secured life, post retirement.
I'm Louida from Atlanta, Georgia and I'm a mother of two daughters, blogger, and full time working mom at a Business Consulting Firm.
I love helping others learn how to start working from home on the internet free to supplement their current income.
I also blog at Productreviewmom.com
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