There are a few factors to consider when weighing your option of annuities for retirement income. Fixed and variable annuities are the two main types offered. With a fixed annuity, you receive interest based on contract terms with the insurance company where you purchased the annuity. You then receive payments over the time frame specified: a certain number of years, your life, you and your spouse’s life, or your life with a minimum amount of years included.
You receive payments the same way with a variable annuity, but instead of an interest rate base, your annuity is based off of the economic market performance. If you are worried about a possible market decline, you can purchase guaranteed minimum benefit riders for your variable annuities. Checking the financial rankings strength of insurance companies before purchasing annuities from them is also a crucial step for securing your monthly payments. Market risk, length of payments, and finding solid insurance companies are a few of the decisions to make when using annuities for retirement income.