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Financial Security Guaranteed for Life: Retirement Annuities

ivon t hughes


August 2, 2013

 

by

Ivon T Hughes

 

 

The steady decline in pensions and the tiny increases in Government pension have made senior citizens rather tense about what they will do when retirement is upon them. The continuing crisis faced by financial conditions of the country has led many to look at other options to ensure that they have some means of guaranteed lifetime income. And this is where annuities come into the picture. Not sure what annuity exactly is and how it is the ultimate solution for retirees? Read on to find out more.

 

Financial Security for Life: Retirement AnnuiitesAn annuity is basically an insurance policy that you purchase from a life insurance company. A Life annuity means that there is a paycheque on your doorstep every month, of a guaranteed amount that you have already paid for. Stock value or interest rate changes have no effect whatsoever on the amount you receive each month. It is exactly the type of assurance that every retiree needs and looks for. This fixed income means a sense of security that a retiree does not have to worry about a guaranteed income at the end of every month.

 

The What and Why of Annuities

When you buy an annuity, you invest a lump sum of money into the insurance company which you use as your retirement program. Research shows that people who do not have any wealth issues are likely to have a longer and healthier life. These tend to be those people who have invested in annuities.

 

Life Annuities

For life annuity holders, this means that the money they invest is returned back to them in agreed amounts each month for as long as they live. Life annuities are very popular among retirees because of a set pattern. Like a salary, you know the amount of money you will get at the end of each month, after any deductions. This leads to a sense of surety about where you stand and what you will get.

 

The Retirement Problems and Their Ultimate Solution

Retirement is that nightmare which rests on almost every citizen’s mind. Those who are salaried employees particularly worry, because they are uncertain about income generation in their old age. The idea of being helpless financially is not something people want to face, especially not as senior citizens. Issues like poor health and other dependencies are enough to avoid financial insecurities as well. This is why many investors suggest that instead of waiting, it is best to invest in annuities now and perhaps take the payment later. Here are some benefits of a fixed guaranteed annuity investment.

 

Stable rates: Whatever the condition of the stock market, the amount on the cheque of your annuity every month, remains the same. This reduces the worry of changing interest rate values or crashing stock markets.

 

Lower Taxes: If you are among those who have non-registered funds, then an annuity is the ideal option for you. Your monthly annuity payment is lightly taxed as portion of the payment is a return of the investment.

 

Lifetime Payment: No more do you have to worry about outliving your income. The life annuity makes sure that you get paid for as long as you live.

 

The Older the Better: Another great thing about a guaranteed life annuity is that the older you are, the higher payment you can generate. You can even have your partner included in the annuity program.

 

Protection: Unlike variable annuities and other investment options, the payment amount is fixed and there is no fear of market downturns.

 

Therefore the security and peace of mind obtained by investing in guaranteed annuities, is perfect for retirees.

 

About the Author:

Ivon T Hughes is a leading expert in life annuities in Canada. His website LifeAnnuities.com is a recognized authority on annuities. He's also an established insurance and investment broker, licensed across Canada through The Hughes Trustco Group since 1972. Recently, he's been redefining how annuities are sold in Canada.

 

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