How NOT to choose the wrong annuity income option

Whether your ideal retirement consists of traveling the world, lounging on the beach, or playing 18 holes of golf every morning, there is one thing that all of these things have in common – the need for a steady stream of income. Even if you have built up a nice-sized nest egg, the reality is that income has much more to do with creating a comfortable financial future than assets do – and one way to ensure that you’ll have an ongoing income stream is with an annuity. Annuities are designed for doing several things – one of which is paying out income for either a set period of time, or for the remainder of your lifetime, no matter how long that may be. But whether or not the income from an annuity matches up with your objectives will be largely dependent upon the payout option that you choose.

Understanding Annuity Income Payout Options

Most annuities will offer a number of different income and withdrawal options. These may include one or more of the following:

• Period Certain – The period certain income payout option generates cash flow for a set time – such as 10 or 20 years. If the annuitant (i.e., the income recipient) passes away before the selected time frame has elapsed, the income payout will continue to go to a named beneficiary until the end of the preset time is over.
• Lifetime Income – The lifetime income option will continue for the remainder of your lifetime – no matter how long that is. This can help to alleviate the fear of running out of retirement income while it is still needed.
•  Life with Period Certain – This income option will also continue for the rest of your life. However, if the income recipient dies before a specific period of time – such as 10 or 20 years – the payouts will continue being paid to a beneficiary until the time frame elapses.
• Joint and Survivor – The joint and survivor income alternative pays until a second income recipient has died. Many couples opt for this payout because it provides certainty that cash flow will continue coming in for the life of both individuals.

How to Make Sure You Go with the Right Annuity Payment

There are several factors that should go into choosing the right annuity payout. These should ideally include your:

•  Anticipated expenses in retirement (factoring in the possibility for higher healthcare costs)
•  Other retirement income sources (such as an employer pension and/or Social Security)
•  Age when you retire
•  Estimated life expectancy
•  Marital status

Likewise, there are also certain criteria that will determine how much income is paid from an annuity, which in turn can help you with planning ahead, knowing how much you can anticipate receiving. These include the:

•  Amount of money in the contract that is being annuitized
•  Interval between the income payments or withdrawals (such as monthly or annually)
•  Duration of the payments (either a set number of years or for the remainder of your lifetime)

Setting Up Your Annuity Income Plan

If you’re ready to plan for a secure retirement using income from an annuity, talk with an Annuity Gator retirement expert who can help you to make the right choice. At Annuity Gator, our mission is to educate consumers (as well as financial advisors) about how these financial vehicles work, and how they can provide you with a steady and reliable income source. We can also help you to narrow down the annuity (or annuities) that could work for your particular retirement and other financial objectives. So, if you would like to learn more about annuity income options, please feel free to reach out to us by calling (888) 440-2468, or you can send us an email with any questions that you have by going to our secure online contact form. We look forward to helping you plan for a secure income in retirement.