Pension plans are fairly rare these days, especially in the private sector. In today’s world, many people build their nest egg by contributing to a 401(k) plan or IRA. Once they retire, they’re responsible for making sure the money they saved up lasts for the remainder of their lives.
Many retirees are concerned about unexpected medical expenses, market crashes, and other factors that could diminish their savings. Others are concerned that they’ll simply live longer than expected and run out of money. Social Security is helpful, but it’s typically not enough to survive on by itself. Some retirees use lifetime annuities, which are contracts offered by insurance companies, to provide them with guaranteed income that they can’t outlive. For some, the income it provides is similar to having a pension.
You typically purchase an annuity using a lump sum of your retirement savings. And while an annuity is not the same thing as a pension in a number of ways, the insurance company offers you the ability to receive regular payments for the rest of your life, even if you live to be 100. Some annuity contracts may even continue to pay to your surviving spouse after you die. The benefit is having a steady check that, combined with Social Security, could substantial income throughout your retirement.
There are various types of lifetime annuities such as fixed, variable, and fixed indexed annuities. They all have different features and different ways of determining if and how your money may grow. Depending on your situation and your personal goals, some may be more effective than others.
If you are concerned about not having regular income in retirement and potentially outliving your savings, you may want to consider a lifetime annuity. You should speak with a professional to determine if an annuity fits into your overall retirement plan and if so, which contract matches your goals. Contact Absolute Retirement Solutions today to speak with an annuity professional in the Kansas City Metro Area.
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