For prepared retirees with a 401(k) and/or IRA, consider supplementing your income with an annuity. Annuities are contracts between investors and insurance companies that start with an initial investment. Immediate annuities start releasing monthly payments right away, so they are paid for up front with a lump sum. Deferred annuities pay money at a specified date in the future, so they can be purchased with a lump sum or a string of payments made over time.
Fixed annuities will not increase or decrease in value, whereas variable annuities offer growth potential and added risk. Both options defer taxes until withdrawal at age 59 or later. This valuable information comes from the Wausau Daily Herald in Wisconsin.