With interest rates remaining at historical lows, the amount of debt in the U.S. has skyrocketed over the past year or so. But this “cheap” money that is being used to purchase homes, cars, and other high-dollar items could come back to haunt you – particularly if you have a change in your income situation.
How to Lock in a Lifetime Income Stream
One way to make sure that debts are paid is to lock in a stream of incoming cash flow – and an annuity can ensure that happens. These financial vehicles are designed for paying out a pre-set amount of income, either for a particular time period (like 10 or 20 years) or even for the remainder of the recipient’s (i.e., the annuitant’s) lifetime – regardless of how long that may be.
Knowing that you can count on this income, continuing to make payments to your debt obligations may be easier, no matter what happens in the stock market or with future interest rates.
Will You Leave Your Loved Ones with a Legacy of Debt?
While an income plan can help you to continue making payments on your debt, what would happen if you were to suddenly pass away? Would your survivors be able to continue making the payments, or would they immediately face a significant financial struggle?
If the answer is the latter, you could still provide your loved ones with a financial “cushion” through a life insurance policy and/or the death benefit on an annuity. People oftentimes purchase life insurance for paying off specific debt obligations such as a home mortgage. These funds are received free of income taxes, so 100% of the money may be utilized.
As an alternative, many annuities today include a death benefit, either as part of the base contract or as an optional rider. Depending on the annuity, it could be set up such that any income you have not received prior to your passing will be paid out in a lump sum to one or more beneficiaries.
Putting a Plan in Place to Protect Yourself and Your Loved Ones from Debt
Because all situations are different, there is not one single debt-payoff strategy that will work for everyone. So, it is recommended that you discuss your particular needs with a retirement income and planning specialist.
At Annuity Gator, our mission is to educate both consumers and financial advisors on how to set up guaranteed income, as well as to take advantage of other annuity features like penalty-free access to funds and the addition of riders that can better “customize” a plan.
So, feel free to reach out to us and talk with an expert. You can reach us by phone at (888) 440-2468 or by sending us an email to our secure online contact form. We look forward to helping you lock in financial security for yourself and those you love.