subject: Using A Retirement Annuity To Ensure You Are In The Clear [print this page] The retirement annuity is the product of our current economic times. In recent years we have seen retirees returning to the workforce in numbers never before seen. Obviously, this is because their retirement accounts did not quite live up to their entire retirement. Part of this is because we are living longer these days, and it is becoming harder to sustain our lifestyles on the retirements that we save up. That is not completely true anymore. These days, we know we are living longer than we used to so we are starting to plan accordingly. Extenuating circumstances have crawled in and made it even harder to save the money we need because there are always things coming up.
A few examples: Perhaps we chose to invest, in the hope of creating more money for ourselves and therefore living an even better life. Real estate and quite a few sure shot investments have failed recently, and with them taken huge chunks of our savings, forcing many people to return to the workforce after retirement. The tough economic times have led to some children needing help, and what parent can deny their children the help they need? None of us expected it to last this long, however, but it did. Our children intended to pay us back, but they could not. And because of that, our retirements did not last.
Retirement annuities were born of necessity, as a vehicle to insure that our retirements lasted longer; were more padded. They were like any other insurance policy: You pay your premiums in a lump sum or in monthly payment and, upon the occurrence of the insured event, the benefit is issued. In this case, the insured event is your retirement, and the benefit is a monthly paycheck designed to supplement your retirement income. The size of the benefit is determined by a variety of factors such as the amount you paid in, how long you were paying your premium, the amount of risk you are willing to take, interest rates, profitability of investments, etc. The more interest your account earned, or the more profitable the investments made on your behalf, the higher you can expect your checks to be.
You have the choice as to how much risk you intend to take on with your retirement annuity. Low risk annuities are guaranteed to lose no value, but they are not as potentially profitable. High risk annuities may actually lose money, but the potential profit is huge. The choice to buy a retirement annuity is up to you, as is the risk. Do your research, speak to your financial advisor and find the best deal for you in a retirement annuity.
by: Katherine Smith
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