Immediate Annuities are perfect for retirement investors who need to switch from accumulation mode to income mode. And the longer you can wait to do it, the better the income.
Because an immediate annuity is a life insurance product, it is tied directly to the unpleasant reality of mortality. The insurance companies use actuarial tables to determine the amount of money they can pay you in exchange for the principal you can pay them. It’s a complicated set of calculations that each company does a little differently, and is indicative of many factors.
The primary determinant of your income from an immediate annuity is your age. The longer you wait to purchase the annuity, the more the insurance company will pay you on a monthly basis.
Another determinant of the immediate annuity is the insurance company itself- their expectation for future earnings, and their past performance, all determine the amount they are willing to pay monthly. While it is tempting to seek out the highest yield, you should pay attention to the credit quality of the issuing company. Sometimes companies that are a little weak may offer higher payouts to attract more premiums, but this could spell trouble in the years ahead if they are not on totally sound footing.
Another aspect to take into consideration with immediate annuities are the options and additional beneficiaries you can identify. A Spouse can benefit from the annuity after the annuitant passes away, but only if the right options are put in place at the outset.
Annuity Straight Talk can help you find the best combination of safety, flexibility, and profitability when choosing the best immediate annuity for your unique situation.