Is Buying An Annuity In Retirement An Option For You?

Is Buying An Annuity In Retirement An Option For You?

by

Shane Flait

An annuity can grow your money and then pay you an income for life. But when should you use one in your retirement? Here\’s when…

Because an annuity is an insurance product, the annuity company can guarantee you a lifetime income, called a life annuity, no matter how long you live – for a premium you pay them. You can either pay a single premium or use the accumulations of annual premiums you paid to a deferred annuity.

If you die early while receiving your annuity payouts, any and all those additional payouts and earnings are lost. That\’s the essential nature of an annuity – and the core upon which you\’ll decide about it.

And of course the insurance company takes a fee for its ability to offer such a unique product. Yes, you can alter these conditions – but they cost more money to do so.

So do you need a guaranteed income for as long as you live? That\’s the essential question. Your first step is to determine what income you need in your present circumstance – as a newly retired person. Here are 3 possible scenarios…

*Scenario one – you have no need for an annuity:

Add up your income from Social Security, your pension, and the earnings you can get from your savings. If this total income is easily enough to cover your annual retirement expenses, then you don\’t need an annuity. Your Social Security is indexed for inflation. But be sure to invest a portion of your savings to generate growth from equity to offset effects of inflation on any fixed income you have.

*Scenario two – you have a possible need for an annuity:

If Social Security and pension doesn\’t generate enough income but your earnings from savings just about brings it all up to what you need, then tighten your belt. Choose some way to lower your expenses to be safe. Now you can choose either to:

1. Invest your savings and withdraw carefully

2. Buy a life annuity with your savings

3. Buy life annuity with 50% of your savings and invest the rest for conservative growth.

4. Buy a life annuity with 50% savings and buy a deferred annuity for use in about 10 or 20 years

You see you can rely on the essential property of an annuity in this scenario if you\’re worried about managing your savings alone.

*Scenario three – you can\’t afford an annuity:

If your Social Security and pension are not enough and you have very little savings, then you\’ll have to take drastic steps to curtail your expenses. Don\’t buy an annuity but use what little savings you have for investing in conservative investments for emergencies.

Shane Flait helps you with your financial legal, tax, and retirement goals. Get his FREE report on Managing Your Retirement =>

easyretirementknowhow.com/FreeReportandSignUp.htm

Read his ebook: \’Wise Way to Financial Independence\’ =>

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