Retirement
Buy An Annuity and Do Not Outlive Your Money!
By Jason Cunningham
Jan 23, 2008 - 7:12:43 PM

When you give an insurance company money for an annuity, you probably expect the insurer to pay an income stream in the future. Depending on whether the annuity that you choose is a deferred or immediate annuity, the annuity payments may start sooner rather than later. If you desire a lifetime income, then you will consider annuitizing the annuity, in order to accomplish this goal.

As we grow older, the majority of us become more concerned with our own retirement. During the planning process, individuals usually calculate how much money that they believe will be needed on a monthly basis, throughout their retirement. Because of the disappearance of defined pensions in Corporate America, people need their retirement accounts and savings to last for the rest of their lives.

Upon retirement some individuals buy a single-premium immediate annuity (SPIA). These persons desire to annuitize their annuity within a period of time less than one year after purchase and have chosen some sort of lifetime payout. For the rest of the annuitant’s life, the payee of the annuity, which may be the same person as the annuitant, will receive a scheduled payment at specific intervals. (i.e. monthly, semi-annual and annual payments).

On the other hand, if you bought a deferred annuity of any kind, whether it be a single premium or for several premiums, you will get more leeway to choose when the annuitization of your annuity will occur. You might decide to live off your savings for a few years and then convert your annuity into a lifetime income, in the form of annuitized payments.

Regardless of what annuity you choose, by annuitizing the policy, you can guarentee yourself a lifetime income, as long as the annuitant continues to live. You might consider speaking to an insurance agent for the purpose of buying an annuity and a tax accountant that is familiar with the tax liabilities that will occur from receiving annuitized payments.