The Best Annuity Plans for Seniors

September 6, 2022

Finding a good annuity plan can become complicated, made even worse by unanticipated economic fluctuations. With inflation rising to its highest level since 1982, what once seemed like an adequate nest egg for a retiree suddenly looks a bit skimpy. Annuities are often ideal solutions for seniors who may be concerned about outliving their savings over a lifetime of work.

How Does Annuity Work?

An annuity is basically an insurance contract with a financial institution that distributes invested funds through a future fixed interest stream. You may purchase the annuity with a lump sum or through monthly payments, and the company returns an income stream for life. Pensions and Social Security are both common examples of annuities. Annuities have two stages: accumulation (when the funds are built) and distribution, called annuitization (when the funds are paid out).

What Annuity Options Are Available?

There are four basic types of annuities, each with its own set of benefits. The types have two factors: when you will receive payments and how to grow the annuity.

  • Immediate Annuity: If you would like to begin receiving annuity payments soon, you can opt to pay a lump sum to the insurer.
  • Deferred Annuity: If you prefer to allow your annuity to grow over time, you can choose to receive payments in future monthly installments.
  • Fixed Annuity: If you want your money to grow through interest rates, your investment is generally predictable, based on a guaranteed interest rate, and the growth is slow but reliable.
  • Variable Annuity: If you prefer to grow your funds through market investments, a variable annuity enables investment through sub-accounts that can match or beat the inflation rate. The growth rate with variable annuities may be dramatic, but the investments are riskier and subject to market volatility.

What Is the Best Time for an Annuity?

Taking advantage of the time value of money is an excellent option for young people beginning their retirement savings, but seniors don't have that luxury. Of the four types of annuities, the best options for individuals with retirement looming are deferred and immediate.

  • Deferred annuities are a good choice for seniors who still have a bit of time before they must receive income payments. These annuities pay higher dividends because the financial institution has more time to invest and grow the funds.
  • Immediate annuities are helpful for those with retirement happening soon. These annuities can start payouts after twelve months with a lump sum payment.

Annuities offer an excellent option for financial security when the length of retirement is unknown, especially when existing savings may not be sufficient. The best plan you can get all depends on your situation and needs.

About 1891 Financial Life

At 1891 Financial Life we don’t just sell policies, we offer possibilities. We pride ourselves on giving back to the communities that we serve by providing quality and comprehensive insurance solutions. We are a not-for-profit life insurance Society, which means the sales from these financial service products help fund member benefits along with social, educational, and volunteer programs designed to respond to community needs.

Our portfolio is extensive, ranging from various life insurance policies to our MYGA to support your financial needs no matter what stage of life you’re in. For more information, contact us at (855) 804-7424.

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