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Immediate Annuities

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Immediate Annuities

Planning for retirement is a process that takes years of preparation, strategy, and savings. While there are many well-known tools for preparing for the future, including IRAs, 401(k)s, long-term disability insurance, and more that could all be integrated into your retirement plan, for some people, investing in an immediate annuity also makes sense. Immediate annuities are designed to provide a stream of income to the annuity holder for a period of time and can help to supplement retirement savings. Here’s what you should know about immediate annuities and how you can learn more by working with our team at Top Investment Solutions.

What Is an Immediate Annuity?

An immediate annuity is a type of contract between you and a financial institution or an insurance provider in which you make an initial lump-sum investment, and in return, you receive income payments for a set amount of time or for the remainder of your life. An immediate annuity is a type of annuity in which the monthly annuity payments begin nearly immediately after the lump-sum payment is made by the annuity holder. 

What’s the Difference Between a Deferred and Immediate Annuity?

All annuities are designed to provide the annuity holder with a stream of income to support them for the remainder of their life or a set amount of time. But annuities can be immediate or deferred. As mentioned above, an immediate annuity is one in which the payments to the annuity holder begin immediately. On the other hand, with a deferred annuity, payments are typically delayed for at least a year, if not longer. 

Variable, Fixed and Indexed Immediate Annuities

Immediate annuities (as well as deferred annuities) may also be variable, fixed, or indexed. Here’s a brief overview of each of these immediate annuity types:

  • Variable annuity. A variable annuity is one that offers a greater chance at reward but also a greater risk. This is because the annuity is invested, and therefore returns and value are based on the current market. 
  • Fixed annuity. In a fixed annuity, returns are guaranteed at a certain fixed rate. While these don’t offer as high of potential returns as variable annuities, they also are far less risky.
  • Indexed annuities. An indexed annuity may be the best of both worlds. In an indexed annuity, there is more potential for higher returns than a fixed annuity, but less potential for as high of return—but also less risk—than a variable annuity. 

Who Should Choose an Immediate Annuity?

Immediate annuities do not make sense for all annuity holders. Usually, immediate annuities are most appropriate for those who are at retirement age and need to start receiving money right away. For those retirees who don’t have other sources of guaranteed income, an immediate annuity can be especially useful. 

Call Top Investment Solutions Today

To learn more about immediate annuities and the benefits of choosing an immediate annuity, call Top Investment Solutions directly today. You can reach out to us by phone or online at your convenience to get started.

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