Immediate fixed annuities: create your own pension for guaranteed lifetime income

 Immediate fixed annuities are a way to create your own pension from your 401(k) or IRA retirement funds. Immediate (not deferred) fixed (not variable) annuities are plain-vanilla products that provide a predetermined income stream that starts paying out right away.While typically sold but insurance salespeople who earn a commission, annuities are also available direct from insurance companies, avoiding the sales commission. 

One example: “a 65-year-old man could currently expect to receive monthly payments of about $481 in exchange for purchasing a $100,000 annuity.” “That translates into an effective income rate (which includes both interest payments and return of principal) of about 5.8%, which is higher than the cash flows generated by most investments. And in contrast to an investment portfolio, which runs the risk of depletion from unexpected longevity, market downturns, or a bad sequence of returns, an annuity won’t run out during the investor’s lifetime (or payout period).” 

The article offers some guidelines on figuring out if an annuity makes sense for you, and if so, how much to allocate.

The article offers 6 steps to decide if an annuity is right for you. Get details at: https://www.morningstar.com/articles/1056871/do-you-need-an-annuity-for-retirement-income?template-name=%7B%7Bletter.config.name%7D%7D&utm_campaign=wp_personal_finance&utm_medium=email&utm_source=newsletter&wpisrc=nl_finance


Source: Financial Planning for Women