Presenter : All Things Annuity
Category : General Annuity Info
Topic : Immediate Annuities Explained
Length : 4 Mins
Article : Immediate Annuities
Tags : Immediate Annuities, income, annuity,
This video explains the features of immediate annuities. Immediate annuities are the most straightforward types of annuity available. They are designed to provide income at purchase, which can last for a set amount of years, or for the rest of your life.
Immediate fixed annuities are ideal for investors who need a steady source of income, like retirees. If you want maximal growth and don't need guaranteed paychecks, fixed deferred annuities are a better alternative. For longer time horizons (5 years+), and investors who aren't willing to forgo a guarantee, deferred variable annuities are a great choice.
Think of immediate fixed annuities as a retirement income booster. You have $100,000 in savings that you plan to use for retirement over the next 5 years. Rather than leaving it in the bank or a low-interest money market account, you give it to the insurance company at a rate of 6% (for instance). The insurance company calculates $133,822 ($100,000 * 1.06 ^ 5) and divides it by 60 months to yield a monthly payment of $2,230. Had you not purchased the annuity, you'd have $560 less to spend per month.