Life expectancies are on the rise, and retirements of 20 years — or sometimes much longer — have become increasingly common. Since you don’t know how long you’ll live, it’s impossible to know how much money you’ll need in retirement. Immediate income annuities were created to help ensure you don’t outlive your savings.
A Safe Option for Lifelong Retirement Income
Immediate income annuities are simple insurance products for retirees or people who are approaching retirement. To purchase an annuity, you make a single, lump-sum payment with part of your savings, or another source of income like a CD. In return, your money is immediately turned into a stream of fixed income payments for life.
Rather than providing money to your family after you pass away, an annuity gives you and your family a steady income to help cover expenses during your lifetime.
An Income You Can’t Outlive
You could choose to manage your money on your own, but there is no guarantee it will last as long as your retirement. Income payments you receive from an immediate income annuity are guaranteed to last for as long as you live.
If you live longer than expected, you could end up receiving income payments that total more than the price you paid to buy the annuity.
Some annuities come with a cash refund feature that guarantees what you paid for the annuity will not be lost. If you pass away before your income payments equal your purchase price, your beneficiary will receive the remaining balance.
Fixed Monthly Income with No Market Risk
Because immediate income annuities are not an investment, they’re not exposed to the risks of the financial market. Your monthly check will never vary with changes in stocks or interest rates. This means you’ll know exactly how much income is coming in each month, which can make it much easier to manage your budget and help pay bills and every day expenses.
The amount of lifetime income you receive is based on a number of factors, such as:
- 1. the amount you use to purchase the annuity
- 2. the type of fixed immediate annuity you choose
- 3. your age when you purchase the annuity
- 4. your gender
Insurance companies offer many different types of immediate income annuities — each with different advantages, depending on your individual situation.
Learn more about annuities in the New York Life Learning Center, or call 1-800-313-6841 to have your questions answered by a knowledgeable representative.