Income Annuity
Contents
Unlocking the Potential of Income Annuities: A Comprehensive Guide
Income annuities, also known as immediate annuities or SPIAs, offer retirees a reliable source of income in exchange for a lump sum payment. This article delves into the intricacies of income annuities, exploring their features, benefits, and considerations for potential buyers.
Exploring Income Annuities
Income annuities are financial products designed to provide guaranteed periodic cash flow, typically starting one month after the premium is paid. Unlike deferred annuities, income annuities begin paying out immediately, making them an attractive option for retirees concerned about outliving their savings.
Understanding Income Annuities
Investors considering income annuities should carefully evaluate factors such as payout duration, payment frequency, and any provisions for principal protection or higher returns based on market performance. These annuities offer a death benefit and may be purchased for varying amounts, with some requiring special vetting for larger premiums.
Who Benefits Most From Income Annuities
The primary beneficiaries of income annuities are retirees seeking a steady stream of income that lasts a lifetime. These annuities can serve as longevity insurance, covering essential expenses like housing, food, and healthcare. However, buyers should be aware of potential drawbacks such as fixed payments unaffected by inflation and the inability to stop or modify payments once initiated.