• Home
  • E-Booklets
  • Pay Less Tax
  • Privacy Policy
  • Cheatsheets
  • Contact Us
  • About us

Retirement Income

New Ways to Get More Retirement Income

  • Retirement Advisors
  • Retirement Insurance
  • Retirement Investing
  • Retirement Living
  • Retirement Planning

Immediate Annuities to Build an Increasing Stream of Income

Posted on September 27, 2011 by bobrichards

Immediate annuities offer a steady flow of income that can last your lifetime as well as your spouse's lifetime. However, with interest rates low and the rising cost of living, retirees are sometimes afraid to place money into assets that produce a fixed income which might not keep up with their increasing needs. One option would be to purchase several smaller immediate annuities over a period of years.

Say that you are a 65-year old man and are considering putting $600,000 into immediate annuities. With that investment, based on present rates, an annuity company will pay you $3,537 per month for the rest of your life (as of 10/3/11). But let's look at what could happen if you were to make three smaller immediate annuity purchases over 10 years.

At age 65, a $200,000 immediate annuity would pay $1,179 per month. Five years later, at age 70, you could purchase another $200,000 annuity which would provide a $1,336 monthly income (assume no change in immediat annuity rates). Finally, at age 75 the last $200,000 would buy an annuity with an estimated $1568 annuity payment. The total monthly income you could start receiving at age 75 would be $4,083, $546 more than with a single large immediate annuities purchase.

The above example assumes that interest rates remain constant throughout the 10-year period. The higher immediate annuity payments come about because the older you are when you buy an immediate annuity, the lower your life expectancy; therefore the annuity company increases the monthly income. And if interest rates rise, the annuity payment could go up still more since the payouts on new immediate annuities might possibly go up as well. Of course, the opposite could happen if interest rates decline. If interest rates were to go down, new immediate annuity rates could fall and you may have been better off with the one-time large investment.

Of course, by opting for several separate purchases, you get to choose the right time to make an investment in immediate annuities so you can wait until the interest rate environment is most favorable.

There's not a simple solution to assuring that your nest egg will last your lifetime, while at the same time having your income keep pace with the ever increasing cost of living. But a judicious use of immediate annuities which supply a lifetime income an be a cornerstone of a sound retirement plan.

 

Most Annuity Owners Make This Mistake

To get wealthy, invest like the wealthy
  • Why the wealthy steer clear of mutual funds
  • How the rich systematically make money in the market
  • Key metrics that differentiate good and bad investments
  • A comparison of ETFs and separately managed accounts you have never seen
  • Stop making the same investing mistakes as everyone else who listens to CNBC and reads Money Magazine. Do what the rich do! Free guide explains how they think and make investment choices.

    You might also like:

    • Recession Can Be Good for Retirees - The Silver Lining of Recession
      Recession Can Be Good for Retirees - The Silver Lining of…
    • Retired and Stocks Losing Value
      Retired and Stocks Losing Value
    • How to Pay Lower Taxes on IRA Distributions
      How to Pay Lower Taxes on IRA Distributions
    • When Will the Stock Market Recover
      When Will the Stock Market Recover
    • Bear Market - When Will It End?
      Bear Market - When Will It End?

    Filed Under: Annuities for Income

    About bobrichards

    Bob Richards
    Editor | Involved in Various Marketing Positions within the Financial Services Industry

    Leave a Reply Cancel reply

    Your email address will not be published. Required fields are marked *

    Second place winner best retirement blog

    SH award winner SMALL (1)

    Not Enough Savings to Retire?
    Learn Six Ways to Earn Retirement Income (from home)

    You do not need special talents, skills, computer knowledge, etc. We show you multiple ways others are working a few hours a week to generate a comfortable retirement income.

    Download Free Copy

    Latest Posts

    Recession Can Be Good for Retirees - The Silver Lining of Recession

    Recession Can Be Good for Retirees - The Silver Lining of Recession

    Bear Market - When Will It End?

    Bear Market - When Will It End?

    When Will the Stock Market Recover

    When Will the Stock Market Recover

    How to Pay Lower Taxes on IRA Distributions

    How to Pay Lower Taxes on IRA Distributions

    Retired and Stocks Losing Value

    Retired and Stocks Losing Value

    Categories

    • 401K IRA Roth Withdrawals, Distributions, and Rollovers
    • Annuities for Income
    • Estate Planning
    • Retirement Advisors
    • Retirement Insurance
    • Retirement Investing
    • Retirement Living
    • Retirement Planning
    • Social Security
    • Supplemental Retirement Income
    • Tax Savings
    • Alternative Investments
    • E-Booklets
    • Pay Less Tax
    • Privacy Policy
    • Cheatsheets
    • Contact Us
    • Subscribe
    • Sitemap

    Recent Posts

    • Recession Can Be Good for Retirees - The Silver Lining of Recession
    • Bear Market - When Will It End?
    • When Will the Stock Market Recover
    • How to Pay Lower Taxes on IRA Distributions
    • Retired and Stocks Losing Value

    The Retirement Income Blog

    25A Crescent Drive #1508
    Pleasant Hill CA 94523
    T: 844-887-4131
    E: [email protected]

    © 2018 Retirement Income