Pages

Immediate Annuities For Retirement Income

The use of immediate annuities for retirement income is easy to understand and well-supported with extensive research.  This is where retirees  go for the highest level of guaranteed income available.

How To Use Immediate Annuities For Retirement Income

In exchange for a lump sum premium you get a guaranteed paycheck for life.  You can look but won’t find a better deal anywhere.  That doesn’t mean immediate annuities come without drawbacks because they do.  Like any other product, the individual situation must call for it- be sure to review the Pros and Cons of Immediate Annuities page

Drawbacks using immediate annuities for retirement income:

Many people are concerned about the fact that payments stop upon death of the contract owner and in some instances that means the insurance company keeps a portion of the initial premium.  If that’s the case, immediate annuity contracts come with additional contract components that guarantee certain payments will be made to heirs.  That will ensure the company at least returns the original amount invested and enough options exist to accommodate the specific desires of each individual planning situation.

Another major concern with immediate annuities for retirement income is that inflation will erode the spending power of fixed payments over time.  As such, most companies offer inflation adjusted payments so income can steadily increase throughout retirement.  As with other benefits, inflation adjustments will cause a lower initial payment. If you are planning on using an immediate annuity for retirement income, the free Annuity Report from Annuity Straight Talk is a great start- just enter your email to the right.

We offer a free Immediate Annuity Report that describes how to use immediate annuities for retirement income in detail and contains a simple calculation table that will give you and idea of where income payments will start.

Immediate Annuity Calculator

Your comprehensive annuity investment guide: Annuities.

Immediate Annuity Calculator

An immediate annuity is a product sold by insurance companies that is designed to provide you with an income stream for life. The income, by definition, is designed to start immediately, although some immediate annuities allow you to defer payments for up to one year.

It is very important to remember that once you set up an immediate annuity, you no longer control the money you put in it. Likewise, while the income stream is guaranteed for your lifetime, an untimely death will not result in any money being returned to your estate. Of course, there are survivor and heirs benefits you can arrange, but you must do so prior to purchasing the annuity, not after the fact.  This immediate annuity calculator is designed to help you estimate, in general, your monthly payments from an immediate annuity.

View all our annuity calculators, or read on for a description of how this immediate annuity calculator works.

Fixed Annuity Calculator

Variable Annuity Calculator

Immediate Annuity Calculator

Fixed Index Annuity Calculator

Immediate Annuity Calculator: Definitions

Amount to invest
The amount you wish to invest in your immediate annuity.  Enter into the immediate annuity calculator.

Your life expectancy
The number of years you expect to live and receive payments. Enter into the immediate annuity calculator.

Annual rate of return
The annual rate of return for the immediate annuity. Enter into the immediate annuity calculator.

Frequency of payments
How often payments are made to you from the immediate annuity. Options include monthly, quarterly and annually. This immediate annuity calculator assumes that your distribution occurs at the beginning of each period. Enter into the immediate annuity calculator.

Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues, including your immediate annuity calculator needs.

We hope you find this immediate annuity calculator useful

Pros and Cons of Immediate Annuities

Immediate Annuities are the most traditional annuity product available.  In simple terms, you give an insurance company your money and in return receive income payments for either a specified period of time or the remainder of your life; the choice is yours.

Pros and Cons of Immediate Annuities: Pros

The benefits are all on the income side…

  • Lifetime Income- With an immediate annuity you will receive a higher level of guaranteed income than you can get with any other product.
  • Income Adjustments- If you add a cost of living adjustment (COLA) or tie your payments to the consumer price index (CPI) than you’ll receive guaranteed income that rises over the years to meet the increases in living expenses.
  • Flexible Payment Terms- The contract can be structured to pay you the way you want to be paid.  Single life payment options are available for individuals and joint options for couples.  Also, income can be guaranteed for a specific number of years or until the original principle is repaid, even if the payments are made to your heirs.

Pros and Cons of Immediate Annuities: Cons

The disadvantages can be avoided with proper planning…

  • Locked Contract- Once you purchase a contract, it is set in stone unless you decide to sell your payment stream, which should only be considered in dire circumstances.  A thorough financial analysis is necessary before final purchase.  As a rule, allocate just enough money in an immediate annuity to generate a comfortable level of income and reserve the remainder of your assets for other investments.
  • Surrender of Principle- You give the company money and they pay you.  When you’re gone, the payments stop and the company keeps the remainder balance, if any.  If you outlive expectations then you win big because the company must pay for life.  Explore the flexible payment terms available to ensure your spouse or heirs are protected with continued income or return of principle.  It may cost you a little on the income side but it’s usually the correct route to take if you have someone to take care of besides yourself.

This should give you a good idea of how immediate annuities work and the pros and cons of the product.  If you want more, sign up for a free membership and download Immediate Annuities:  The Official Report. This report goes into greater detail on how these annuities work and the payment terms available.  Also included is a payment rate spreadsheet so you can do a little calculation on your own and begin to see just how an immediate annuity can give you the safety, flexibility and profitability that everyone wants in retirement.  You can sign up in the form to the right.

This is the most traditional annuity product available.  In simple terms, you give an insurance company your money and in return receive income payments for either a specified period of time or the remainder of your life; the choice is yours. The benefits are all on the income side… Lifetime Income- With an immediate annuity you will receive a higher level of guaranteed income than you can get with any other product. Income Adjustments- If you add a cost of living adjustment (COLA) or tie your payments to the consumer price index (CPI) than you’ll receive guaranteed income that rises over the years to meet the increases in living expenses. Flexible Payment Terms- The contract can be structured to pay you the way you want to be paid.  Single life payment options are available for individuals and joint options for couples.  Also, income can be guaranteed for a specific number of years or until the original principle is repaid, even if the payments are made to your heirs. The disadvantages can be avoided with proper planning… Locked Contract- Once you purchase a contract, it is set in stone unless you decide to sell your payment stream, which should only be considered in dire circumstances.  A thorough financial analysis is necessary before final purchase.  As a rule, allocate just enough money in an immediate annuity to generate a comfortable level of income and reserve the remainder of your assets for other investments. Surrender of Principle- You give the company money and they pay you.  When you’re gone, the payments stop and the company keeps the remainder balance, if any.  If you outlive expectations then you win big because the company must pay for life.  Explore the flexible payment terms available to ensure your spouse or heirs are protected with continued income or return of principle.  It may cost you a little on the income side but it’s usually the correct route to take if you have someone to take care of besides yourself. This should give you a good idea of how immediate annuities work and the pros and cons of the product.  If you want more, sign up for a free membership and download Immediate Annuities:  The Official Report.  This report goes into greater detail on how these annuities work and the payment terms available.  Also included is a payment rate spreadsheet so you can do a little calculation on your own and begin to see just how an immediate annuity can give you the safety, flexibility and profitability that everyone wants in retirement.