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Can Fixed Annuities Also Be Lifetime Annuities?

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Meant to be a replacement for social security payments when one retires, lifetime annuities are becoming increasingly popular. They are a viable reliable option. There is a difference between fixed annuities and lifetime ones as well as some things to know before you purchase one.

Lifetime annuities are policies purchased from private insurance companies, designed to pay out in small chunks at retirement age until death. With baby boomers beginning to retire and receive payment, the Social Security Administration is wishing for more payees into their system. Unfortunately, these workers are just not there. Therefore, private funds just make sense.

Fixed annuities are just what their name implies, the policy contract, and thus payments, are only given for a specified length of time and amount. They are great while they last, but what if one lives to 95, not 85 as expected? Thus, a lifetime annuity is a wise choice, because it’s payments cover you until death, whenever that may be. It is also wise to remember, these are not individual retirement accounts, stocks, bonds, mutual funds or Certificates of Deposit. They are strictly insurance items. One pays a premium, a large lump sum, and then your money grows, based on the insurance company’s investment strategy, until pay out time arrives. Ideally, beginning this process early ensures greater payments.

There is technical jargon making it important to seek the counsel of a certified retirement financial planner. Also, there is one term pertaining to lifetime annuities one should know. The purchaser should be sure to get inflation protection. This means that one’s payments are indexed with the rate of inflation.

Lifetime annuities can be more than simply supplemental retirement income, like most social security payments. They do include fees, but no physical exam is required and they are guaranteed. Most importantly, peace of mind relieves you for a lifetime.

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