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Chuks Udo Okonta
As we celebrate our dads on Father’s Day, we should remember that most of them that have retired are in need of good comfort owing to the tough economic headwinds that have rendered their retirement income almost worthless.
Though there were efforts by the government to support some of them with pension enhancements, the efforts are like a drop of water in an ocean of needs.
To effectively support our darling dads, we can buy them an immediate annuity as a retirement benefits enhancement.
An immediate annuity is a financial product, typically offered by insurance companies, that converts a lump-sum payment into a guaranteed stream of income payments, starting shortly after purchase.
It’s designed for individuals seeking immediate retirement income, with the first payment typically occurring within a year of the initial investment.
Benefits
The major benefit of an immediate annuity is that payments can begin almost right away, often as early as 30 days after the contract is purchased.
The purpose of an immediate annuity is to take your retirement savings and turn it into secure, reliable, guaranteed income payments. Depending on the payment option selected, you may be able to receive income for life—meaning you will never outlive your income stream. However, other payment options allow you to receive guaranteed payments over a defined period of time, say 10 or 20 years.
You can lock in income for as long as you choose
Flexibility is one of the biggest advantages of an immediate annuity, because you decide how long you’ll receive income. You might elect to only receive income for a limited period—perhaps to cover the gap between when you stop working and when you begin taking Social Security. Alternatively, you may choose to guarantee payments through the rest of your life and your spouse or partner’s life.
Options include:
Single-life income: Payments for the rest of your life.
Joint-life income: Payments for the rest of your life and your spouse’s life.
Fixed-period: Payments for a certain number of years.
Specified amount: Payments of a certain dollar amount that stop when the contract is depleted.
You choose your payment amounts
An immediate annuity allows you to tailor your payments to meet your needs. You set the starting amount of your annuity’s income payments and choose:
A level amount. Your payments remain the same throughout the entire payment period. This may be appropriate if you want to rely on receiving the same payment amount every year.
A fixed-percentage increase. You choose an annual increase each year, such as between 1 per cent and 5 per cent. This may be appropriate if you want your payments to increase and prefer to know exactly what they will be in the future.
Inflation-adjusted. If the consumer price index is positive, payments will adjust upward to a cap. This may be best if you are concerned about inflation risk to your retirement savings.
You can start to receive income right away
An immediate annuity can start issuing payments to you as soon as 30 days after your purchase date. If you prefer, you can put off the first payment for up to one year. If you like the idea of an annuity but want income payments to begin later, consider exploring a deferred annuity instead.
You choose your payment amounts
An immediate annuity allows you to tailor your payments to meet your needs. You set the starting amount of your annuity’s income payments and choose:
A level amount. Your payments remain the same throughout the entire payment period. This may be appropriate if you want to rely on receiving the same payment amount every year.
A fixed-percentage increase. You choose an annual increase each year, such as between 1% and 5%. This may be appropriate if you want your payments to increase and prefer to know exactly what they will be in the future.
Inflation-adjusted. If the consumer price index is positive, payments will adjust upward to a cap. This may be best if you are concerned about inflation risk to your retirement savings.
They’re easy to manage
The contract terms for an immediate annuity, including your premium cost and your income payout amounts, are decided from the start. So, there’s no need for account monitoring and management. That means that immediate annuities typically don’t have any account management or maintenance charges.
A death benefit can extend payments to your heirs
Most immediate annuities give you the opportunity to include a death benefit in your contract. If you opt for a guaranteed payment period and pass away before it concludes, your beneficiaries will receive the remainder of your scheduled payouts. If you’re concerned about supporting your family after your death, this might be a reliable way to ensure their care after you’re gone.
They’re easy to manage
The contract terms for an immediate annuity, including your premium cost and your income payout amounts, are decided from the start. So, there’s no need for account monitoring and management. That means that immediate annuities typically don’t have any account management or maintenance charges.
You can lock in income for as long as you choose
Flexibility is one of the biggest advantages of an immediate annuity, because you decide how long you’ll receive income. You might elect to only receive income for a limited period—perhaps to cover the gap between when you stop working and when you begin taking Social Security. Alternatively, you may choose to guarantee payments through the rest of your life and your spouse or partner’s life.
Options include:
Single-life income: Payments for the rest of your life.
Joint-life income: Payments for the rest of your life and your spouse’s life.
Fixed-period: Payments for a certain number of years.
Specified amount: Payments of a certain dollar amount that stop when the contract is depleted.
Our dads having invested in us, we should reciprocate by giving them the best we can avoid before they answer the divine call.
Solve that your dad’s retirement complaints today by enhancing his retirement benefits with an immediate annuity.
