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Surprising Ways to Make Your Annuity Plan Work for You

August 02, 2021 3439

When people think about retiring, they get filled with both hope and a little anxiety. If you ask your friends, they might say they’re planning to travel or learn something new once they hang up their working boots. Others might want to enjoy life with their spouse at home. People may have different ideas of what retirement should look like, but they all have one thing in common – they know they must secure their finances for the future. The easiest way to plan for retirement finances is with an annuity plan.

Features ofAnnuityPlans

Should you decide to purchase an annuity retirement plan, you can enjoy a host of benefits, including:

Financial Security

Your annuity provides you with regular payouts. If anything happens to you, your nominee still receives the benefit. With an annuity plan, you can rest assured that you and your family will always have a financial safety net in times of trouble.

Safe Investment Avenues

When it comes to planning for your retirement, you probably want to play it safe. Annuities often provide low guaranteed benefits since they do not expose your money to market risks. They are low-risk and provide you with a steady income.

Complete Flexibility

When you purchase annuities, you decide how often you want to receive the payouts. You can choose to receive an annual payment or a monthly one. Pick whichever option works for you based on your retirement goals.

Tips to Make Your Annuity Work for You

Use Fixed Annuities to Your Advantage

When you opt for a fixed annuity plan, you know exactly how much you will receive in a year. The amount remains the same throughout the policy term. Unfortunately, your expenses will grow over time, so you must budget for the future accordingly. You can try something known as a bucket strategy. Here, instead of putting all your money in a single plan, you purchase multiple annuity contracts. The first annuity plan should offer immediate payouts. The other two, however, should be deferred. Assume your spouse wants to retire in seven years. You should defer your second policy for at least five years. If you’re worried about your health declining in the next 10 or 15 years, you can defer your third plan accordingly. With this strategy, you receive money as and when you need it based on your financial goals.

Choose Your Payouts Wisely

Most people opt for annuity plans that provide lifetime payouts. While this does offer financial protection, it could lead to lower gains and your money getting stuck in a slow investment. Instead, opt for a dedicated payment period of 10 or 15 years. You can use the payouts to reinvest your money in other market instruments that offer high rewards.

Opt for Riders

When you purchase an annuity retirement plan, you provide yourself with financial security. But, medical expenses could eat into your regular payouts. To ensure you don’t end up spending all your income on hospital bills, opt for a plan that offers health cover as a rider. If you do this, your annuity doubles up as a health plan.

Finding the Best Annuity Plan

To purchase the best retirement plan for your needs, you must keep a few crucial things in mind:

Timing

Do you want to start receiving payments immediately? Or are you okay to wait a few years? You can opt for an immediate annuity plan or a deferred one based on your answer. With a deferred policy, you will start receiving the payments after a gap of five or more years.

Risk Appetite

You can choose between fixed and variable annuity plans. Fixed plans will let you know how much annuity you can expect upfront. The amount does not change, irrespective of market ups and downs. If you’re open to exposing your money to slightly risky investments, you could opt for a variable annuity. Here, your returns depend on market conditions. A variable annuity plan does entail some risk, but it could also lead to higher rewards.

Coverage

You can opt for an annuity plan just for yourself or also add your spouse to the policy. A joint-life annuity provides your spouse with financial independence even when you’re no longer around. Initially, you receive all the annuity payments. If something happens to you, your spouse receives the benefit instead.

Many people shy away from including annuities as part of their retirement plan. But as you can see, if you make a few wise choices, an annuity plan could help you achieve all your retirement goals with ease.

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