The payment is delayed as soon as an immediate annuity is taken is a myth. The fact is that immediate payment is released on an initial investment of amount. Therefore, when you are nearing retirement it is the best investment to opt for. It pays money instantly. Even deferred annuities can be converted into an immediate annuity. An immediate annuity is a popular choice among several clients. All the more it gives them income from day one.
Immediate annuity helps to retire in a rich manner is a known fact. Whereas, the myth is that it is not reliable. This is not true at all as it allows a large amount of money. It ensures that the investment made multiplies in a short time. However, this guaranteed income is of two types immediate and deferred. The former makes payout immediately. It is a fixed amount given according to the period opted or a lifetime.
In variable annuity the payment is made as per market performance. It depends on the investment type agreed upon. It pays till a certain time, which is a deterrent. The interest rate is agreed upon initially and paid accordingly. Moreover, the payment is rolled out after a certain number of years. Sometimes, more than 10 to 15 years onwards. This could be a long time waiting as against immediate annuity. However, the benefits could be higher returns in the end.
An immediate annuity is not for low-risk tolerance is a myth. The real picture is that it offers predictable income. There is a growth factor that enables the investor to diversify money into other financial profits. It gives ideas for new business growth. It is for those with low-risk tolerance. The returns may not be phenomenal but the annuity is secure.
The Pros of Immediate Annuity
It identifies the best investment strategies. The features and immediate benefits it carries. There is a planned income that meets emergency needs, whether medical or natural disaster, the money will continue to flow. It could also be a normal purchase or buying a gift for a dear one, the income will be there. Moreover, it takes care of ongoing expenses and associated costs. There is no risk as expenses can be planned. It is easily understood in return for substantial income. A valuable investment is made for fixed returns.
The Cons of Immediate Annuity
The biggest Cons about Immediate Annuities are: carries market risk, long term investment, the payment could fluctuate if the market turns volatile and taxes will lower the payment value. There is no truth in these cons at all; there is no risk with an immediate annuity, it’s conservative and safe, your personal taxes may go up and down but the payments will never change due to being fixed and guaranteed.
In a nutshell
The key to breaking all myths and cons is to invest in a company with a good rating and high market value. Make good judgment, clear up all questions with your agent and look for transparency. Remove the fear of running out of income. Therefore an immediate annuity offers benefits that come as no surprise and put your mind at ease.
