Questions To Ask Before Investing In Annuities
Preparing for retirement means setting up one or more guaranteed income streams, but you can only do this with the resources you have. Living off of the interest of your savings is only possible if you are wealthy and interest rates are robust. Jobs that pay you a lifetime pension after retirement are a veritable jackpot, but these kinds of employment benefits are increasingly difficult to find. Annuities are a popular source of retirement income, but they also have their outspoken critics. Investing in an annuity is like buying a pension that pays you a guaranteed annual income stream for a certain period of time, or even for the rest of your life. If you are wondering whether annuities are good or bad or which kinds of annuities are best, that depends on what kind of benefits you need the most from the annuity and what other sources of income you have. To find out more about annuities and other aspects of your retirement plan, contact an Orlando estate planning lawyer.
How Much Money Can You Withdraw?
In general, you cannot start collecting income from an annuity until six months before your 60th birthday, no matter how young you were when you bought it. Most annuities allow you to withdraw a certain amount early without penalties, but after that, the early withdrawal penalties start to add up.
Is the Annuity Guaranteed to Keep Up With Inflation?
If you want an investment that is guaranteed to generate a lot of income from interest, you are better off investing in certificates of deposit (CDs) or depositing as much money as you can into savings accounts while you are working and not withdrawing any of it until after you retire. Most annuities generate very little interest, if any. Therefore, the annual income you agreed to when you bought the annuity might feel like chump change once the payouts start coming. Given how high the inflation rate is these days, you should ask if the annuity payout will be adjusted for inflation before you choose an annuity.
Can You Name a Beneficiary to Receive Money From the Annuity After Your Death?
Some annuities include death benefits, which means that the annuity keeps paying you an annual income for the rest of your life and then pays a lump sum to a beneficiary of your choice. Annuities with death benefits usually pay a lower annual income than the ones that do not have death benefits. Before you decide on an annuity, you should do some price comparisons. Especially if you are young, it may be less expensive to buy a life insurance policy and then to buy an annuity that does not include death benefits but does give you a higher annual payment.
Contact Gierach and Gierach About Diversifying Your Retirement Income
An estate planning lawyer can help you make realistic choices to find multiple sources of income to fund your retirement. Contact Gierach and Gierach, P.A. in Orlando, Florida to discuss your case.