Annuities After Retirement

The difference between people who look forward to their retirement and those who wonder if they will ever retire is the fact that the former group has made investments in annuities. There are two phases in an annuity investment, the accumulation phase or the period when you pay a premium or premiums and the pay out phase when you begin to receive income from the investment.

Annuities are designed to help people live independently and comfortably in their retired years and truly make them the golden years. Insurance companies offer individuals a chance to buy an annuity by making a one-time payment or several premium payments and assure them a certain rate of return that may be revised from time to time. There are many types of annuities that can be used to plan for your retirement and to ensure that little changes in your lifestyle after you stop working. The different types of annuities include deferred annuities, equity-indexed annuities and immediate annuities.

The income received from the annuity would depend on many factors such as the age of the investor, rate of return, etc. Women usually receive less income than men because they have a longer life expectancy. Also if partners hold the annuity jointly then the income received is lower.

Some features of annuities after retirement:

* Tax is deferred on annuities and is paid on the gains one receives as income from the annuity. Since one is in a lower tax bracket, the tax is thus affected. Also the gains from the annuity are taxed as ordinary income.

* Only the part of the income that is considered as gains are taxed and not the rest of the investment.

* After your working years you can decide to receive income from the annuity for the rest of your life or for a fixed period of time.

* The income can be received as the investor wishes, on a monthly, quarterly or yearly basis.

* In cases where people have not invested in annuities before their retirement they may choose to do so later. There is no age limit on investment in annuities. For such investors the immediate annuity may be the most appealing. The immediate annuity begins paying income to the investor virtually as soon as the annuity is bought.

* If required payment from an annuity can also be deferred until the investor is ready to receive it.

* If the retired person has a bulk sum of money then investment in an immediate annuity will supplement the other sources of income.

Your retirement can be secure and enjoyable by investing in an annuity. If you haven’t created a personal retirement plan with an annuity, it is never too late to start. Buy an annuity today!