How do income annuities work?

Now’s the time for you to start paying “future you.”

As a working adult, you get a regular paycheck. That means steady, dependable payments that we spend or save. But, once you come to the end to your working days, don’t you want that regular income to continue for your retirement?

Since people are living longer than ever before, you could need that retirement income for many, many years. So, how do guarantee that retirement money for as long as you may need it? That’s where annuities come in. Income annuities are an effective, easy-to-understand financial tool that can be an important piece of your overall retirement plan.

An income annuity is an agreement between you and your insurance company. You provide them with some of your retirement savings, and they provide a fixed payment back to you every month, without fail, as long as you live. You can choose to get your annuity payment immediately or starting at a future point in time. And, since the annuity is backed by the claims paying ability of the insurance company, you should choose one that has a solid financial rating and your long-term interest in mind. 

Income annuities are:

• Simple--they are one of the most straightforward tools you can have in your retirement strategy.
• Safe--unlike some investments, they are not tied to the ups and downs of the financial markets. If the markets take a dive, your payments don’t.
• Stable--there are various payout options so payments can continue to your loved ones, at least until your initial premium has been returned.

Income annuities are not for everyone. But they can be an important part of your retirement portfolio. 

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