As people are staring to live longer, annuities have become a little more complicated. There are many different options that you can choose from now. Insurance companies have variable annuities that promise you a certain minimum payment, and offer a chance at bigger payments when the assets earn a higher value. You can invest a little bit of money from this into more risky ventures and possibly make a lot of money if you choose.
As people live longer, then there are more chances for serious illnesses. People may need a large sum of money in a hurry. There are annuities out there that will let people get some or all of the principal if they need it. There are also annuities that will continue to pay out after a spouse is deceased to the other living spouse.
Immediate and deferred annuities are both good depending on what you are looking for. An immediate annuity is simply when a person pays a large sum and starts getting payments instantly. A deferred annuity is when a person chooses to make payments over a certain amount of time to get the money built up and then payments are paid out in the future like when a person retires. Immediate annuities are good for people that have a lot of money or that win the lottery. The most common choice is the deferred annuity, which is used for many people planning their retirement.
Investors should think about how much of their portfolio they want to leave to annuities. Many financial planners suggest making sure that basic expenses are covered with annuities. The bigger risks you take the more money you can make though. If you feel brave, then you might want to try out the stock market or other investments. The younger you are, the more risks you can afford to take.
