Annuities, annuities, annuities. I can’t stop hearing about them, but I don’t know a lot about them. What is an annuity? Some of you might be wondering what an annuity is and you might be confused whenever someone says the term. How will it benefit me also? Well no more fearing because today I will be talking about annuities and how they might be able to help you in your retirement.
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Annuities are sold by financial institutions and are created to grow your money. They are a financial product that upon a certain designated time, the annuity then pays out a stream of payments to the individual at a later point in time.
Individuals buy annuities for various reasons, such as so that they can have stable payments when they are preparing and ready for retirement. This can be for when the person is retired or no longer able to work. Having a monthly payment while in retirement can be a lifesaver. Annuity providers, such as those found on Aviva, also allow you to convert your current pension plan into a regular income, which can be used to help supply money for your retirement. Different people receive different amounts each month, depending on certain factors (as discussed below).
Retirement is on a lot of peoples’ minds of course. Having a good amount of retirement savings and also having stable cash flow into retirement is very important. You want to enjoy your retirement, right? Not having to worry about where your next payment is coming from can make retirement living more comfortable.
Many individuals expect that retirement will be hard because of a decrease in cash flow. But this is where annuities come into place!
Being able to have a monthly payment coming in is always good, as everyone, of course, has some sort of expense and budgeted items that they need to pay for.
How much an individual receives every month from their annuity depends on a number of factors such as the size of their pension fund (the more you pay in, then the more income you should expect from your annuity every month and altogether than someone who pays less), age (the older you are, then the more income you might receive every month, as opposed to someone who is very young and starts receiving payments), health (individuals with existing health conditions might get a higher income every month than those who are healthy) and lifestyle (those who are healthy might get a lower rate as they are expected to live longer than those with unhealthy lifestyles).
Is an annuity in your retirement future? Why or why not?
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