Immediate Annuities

Immediate Annuities

Immediate Annuities

It's amazing how many seniors blindly buy immediate annuities from insurance agents thinking the immediate annuity will solve their retirement income problems--but unfortunately this is not the case.

The first issue seniors must understand about immediate annuities is that these types of annuities often do not return the original investment principal back after all the income payments have been received by the investor. Example: The investor invests $100,000 in an immediate annuity, but only receives $89,000 in aggregate income payments over time.

Often many seniors (specifically men) purchase immediate for life, thinking if they die their wives will have an income stream after their demise. Unfortunately, these men did not read the fine print. These types of immediate annuities which give the highest payout for life payouts are the worse annuity sold. Your life is insured for your life, however short that life is.

Let's say you only live for 30-days and you receive only one payment. Your spouse will get nothing! Yes, nothing. The balance of your investment reverts to being owned by the insurance company. The fine print states that you will receive an income payment for life, regardless of how short or how long you live. Don't bother investing in this type of annuities. It will cause all sorts of legal problems for your spouse.

There is also an immediate annuity with guaranteed period certain. This means the immediate annuity will payout an income stream for your life plus an additional payout of 5,10,15, or 20 years for your spouse. The better the deal the smaller your income payout for yourself and your spouse. Supposedly these products were designed to solve for an income stream for retirement, but when you look at the income stream against other products, a money market would have been a better investment.

Then there deferred annuities which are converted to an immediate annuity (called annuitization). Let's say you were earning 4% in a deferred annuity, and then you annuitize. Once the deferred annuity is annuitized you will be earning an immediate annuity rate of approximately of 1% or less. Where is the logic in that? If you are serious about maximizing your money in retirement, then go to this website: Immediate Annuities

What's even more important than solving for maximum income, is the ability to recover your original investment principal. It would be extremely unfortunate if you ran-out of money in retirement. So, please click on the above link further details on solving for recovery of principal.

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