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Immediate Annuity

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.

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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.

Immediate Annuity

The Immediate Annuity has several names- Instant Annuity, Single Premium Immediate Annuity, Single Life Annuity, and Single Payment Annuity, among others.  All refer to the same thing- An Immediate Annuity is a contract with an insurance company that immediately converts your savings into an income stream.

In terms of Timing, the payments of income and principal commence immediately, in contrast to Deferred Annuities which build for some time before converting into payments.

Immediate Annuity Benefits:

The Immediate  Annuityprotects your retirement with steady, predictable income.  You can learn more about the Pros and Cons of Immediate Annuities here. Also, there are a wide array of annuity options and riders that add benefits and duration to an Immediate Annuity income stream.

For example, if you want to remove all the responsibilities and risks associated with managing your money thru retirement, the purchase of an immediate annuity can give you a guaranteed income stream for life, no matter how long you live.   Or, if you have assets that make you ineligible for Medicaid, an immediate annuity may allow you to remove the assets from your estate.

How an Immediate Annuity Works:

You can buy an immediate annuity with funds available from a 401k, IRA, savings account, life insurance policy, inheritance, or even the sale of a home or major asset. The insurance company you select promises to give you an income stream you select in exchange for an upfront premium expense.  The company assumes all investment risk and calculates the income amount based on your age-weighted life expectancy. You can choose how often you receive a payment from the annuity, such as monthly, quarterly, or yearly. The amount of income you receive is based on the amount of money you initially contribute, plus a number of factors including your age, sex, income option selected, and interest rates at the time of purchase.

Get our report to learn how an immediate annuity can help, if:

  • You want certainty that you won’t outlive your income,
  • Your retirement expenses are not covered by your monthly pension payment,
  • You want to eliminate management of your retirement savings,
  • You want to protect assets from high nursing home costs.

Please Contact Us and let us find the best Immediate Annuity for you.