A financial advisor can help you understand the different payout choices.
A fixed annuity can be an attractive retirement savings vehicle if you’d like to receive a specified income at regular intervals for the rest of your life or for a term of years (based on the claims-paying ability of the insurer). You may appreciate the relatively low risk and tax-deferred growth a fixed annuity provides.
How much you receive from an annuity generally depends on your age, when you begin to receive payments, and the amount of money available (gender may also play a role).
Once you own an annuity, you’ll need to select a payout option when you reach the annuity’s starting date, which is usually retirement. Many annuities offer a number of different payout choices.
A Review of the Basic Payout Choices
Here’s a brief overview of the basic options:
Life Only. This option provides income for life and generally provides the largest benefit of all the options. You can receive payments monthly, quarterly, semi-annually, or annually. Note that after you die, all payments stop.
Life with Term Certain. With this option, you receive income for life. If you die before a stipulated time (the term is certain), usually 5, 10, 15, or 20 years, the payments then continue to a beneficiary.
Joint and Survivor Life. Under this arrangement, two individuals receive annuity payments for both of their lives. When one dies, the other continues to receive income, or some portion of it, for the remainder of his or her life.
Installment Refund Life. With this option, if you die before you have received at least as much as your original premium payment(s), the balance is paid out to a beneficiary in installments.
Unit Refund Life. This option is similar to the installment refund life option, except that the beneficiary receives the balance in a lump sum.
Payments for a Specified Period. Payments are made for a pre-specified term, generally ranging from one to 30 years, and then continue to a beneficiary if you die before the term ends.
What Should You Do?
Fixed annuities offer a reliable option for securing retirement income with minimal risk and tax advantages. At Heritage Financial Planning, we specialize in guiding clients through crucial decisions like these with our proprietary HFP S.T.A.R. Strategy Process.
Click here to learn more about our HFP STAR Strategy process.
Whether you’re nearing retirement or planning for the future, now is the time to take action. Contact our offices today to schedule a consultation and discover how our expertise can tailor a fixed annuity strategy to align with your long-term financial goals. Your retirement deserves careful planning—let us help you navigate the path to financial security with confidence.
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