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Reduced to its simplest form, an immediate annuity is a single lump payment (single payment annuity) that begins distribution within a time frame no longer than a single calendar year. (The standard time between purchase of an immediate annuity and distribution of said annuity tends to be within the 1-2 month range) With a deferred annuity, you are forced to wait a while before distribution begins (generally allowing annuity to gain money) as opposed to the almost immediate distribution of the latter annuity type. (Hence the title) In both cases, you are given the option of choosing a fixed or variable annuity plan, dependent on your unique financial situation and long term goals. One of the benefits of choosing an immediate variable annuity is that it can help keep pace with inflation as the years roll by.
An immediate annuity provides an excellent source of income for those who are about to retire, or those who have recently retired. By taking a relatively large sum of your savings and putting it into an immediate annuity, you can help pace your retirement spending and ensure a constant income for the rest of your life. For those people who feel that the designated payments aren't enough to live on for said period of time, it is recommended that you keep some form of liquid account such as a savings or money market account where you have ready access to your funds whenever necessary.
What are some of the benefits to choosing an immediate annuity plan?
- Immediate annuities can provide steady income for the duration of your life.
- You set the annuity pay periods; be it weekly, monthly or yearly.
- Pay income taxes only when you receive annuity payments; be it weekly, monthly or yearly.
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Want more annutiy info? Read up on RETIREMENT ANNUITIES
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