The Emergence of the Retirement Annuity

Once you quit the workforce and no longer have the benefits of regular income from employment, you will have to generate income from the various investments in your portfolio. Puritan Financial Group is just one of the many companies that can help you find a solution. While some assets should be geared towards monetary growth, you may have to allocate a huge chunk of your overall investments for the preservation of your principal. Simply put, people nearing retirement usually have lower risk tolerance, and are most likely to need fixed income from sources like annuities more than the gains they receive from assets such as stocks.

Immediate Annuities versus Deferred Annuities

At the onset of retirement, many retirement planners and investment experts recommend that you shift some of your assets from deferred annuities to immediate annuities. Why? Deferred annuities discourage early withdrawals, meaning you cannot touch your money or take distributions before the annuity matures without having to pay sizeable penalties. In comparison, immediate annuities can provide you with income almost immediately after you make your payments. Because immediate annuities address the need for virtually instant retirement income, these help you avoid the possibility of outliving your nest egg.

When You Need to Purchase Immediate Annuities

Immediate annuities can be practical investments for people in various financial and personal situations. For example, a person who used to participate in employer-sponsored defined-contribution plans can withdraw the money in his account and use that money to buy an immediate annuity - this gives him the ability to add to his guaranteed income streams. Companies can also finance pension plans with defined benefits via investments in immediate annuities for their employees. If the future annuity buyer has exhausted means such as making maximum contributions to his 401K or IRA, he can also benefit from immediate annuities.

Immediate annuities utilize various payout plans, starting out from traditional plans that need consecutive regular payments to lifetime annuities that reverse income, which has yet to be distributed to the insurer when the annuity plan holder passes away. There are variable annuities that are not as popular but still have the potential to provide you with benefits, which give out amounts that are based on the investment's performance under the conditions of the market. In order to learn more about the different annuities offered, consider contacting a company like Puritan Financial Group.

Products such as the immediate annuity are now popular because of changes in its target market, including trends in early retirement and the tendency of the elderly to live much longer than their counterparts decades ago. The contemporary retiree who retirees in his 60's is likely to live into his 80's and beyond, which makes the features of and income from an immediate retirement essential to retirement security.