The immediate annuity is expected to become the retirement vehicle of choice for many workers who have lost the benefit of a traditional pension plan. According to the Record Searchlight’s Lewis Chamberlain in the article, “Annuities worth a look to pay for retirement,” defined benefit plans went from serving 80% of full time workers in 1985 to serving 36% of workers in 2000. To fill the income gap left after losing defined pensions, many employees look to the immediate annuity. Investors make a lump sum payment to an insurance company, which in turn pays them a monthly income that can last over their lifetime. With decreasing pensions, unsteady social security, and 401k plans that are turned over to the employee to manage upon retirement, many Americans are at risk of outliving their money. Using some of their 401k savings or other money to buy an annuity will give financial security for Americans.
There are many circumstances right now giving us a greater risk of outliving our savings. High inflation, increasing life expectancies, bad investments, long periods of a declining stock market, and major health problems can take up most of our life savings. You can buy an immediate annuity that will give you income guarantees over your lifetime. Your monthly payment with an immediate annuity varies depending on your age, how long you want your payout, how much money you pay into the annuity, and whether you choose variable or fixed annuities. While annuities have less risk than many other investments, they are not without and you should always do your research to make sure an immediate annuity is the best product for you. Selecting a strong insurance company is crucial, because you need to make sure they will be around to continue making your monthly payments over your lifetime. More and more Americans are looking to finance their future with an immediate annuity.