How to set up your immediate annuity
So, you've decided on an immediate annuity, also called an income annuity, will be a valuable part of your retirement plan. What happens next? How do you structure an immediate annuity to get the most out of it? Let's go over your options.
Information Courtesy of USAA Life Insurance Company and USAA Life Insurance Company of New York
Think about your payment needs.
How do you get the most out of an immediate annuity? It turns out there is no one right answer to this question.
What are my annuity payout options?
With immediate annuities, such as a single premium immediate annuity, you can choose to get guaranteedSee note1 payments for the rest of your life, a set period or both. If you're married, you can choose a joint lifetime payout that will continue payments during your spouse's and your lifetimes, ending only when you both pass away.
If you decide to receive payments for life only, your payments will be larger but your premium may not be returned in full. A joint lifetime payout will continue payments during the lifetimes of you and your spouse, ending only when you both pass away.
You can select a period of time during which you'll receive payments — typically 10, 15 or 20 years. The choice is yours. If you die during this period, any undistributed funds in the annuity will go to your beneficiaries.
Lifetime with a guaranteed period of time
- Guaranteed income for a set period
- Income for life, even if you outlive the guaranteed period
- Remaining payouts for beneficiary, if you die during the guaranteed period
Guaranteed period of time
- Guaranteed income for a set period
- Remaining payouts for beneficiary, if you die during the guaranteed period
Lifetime only
- Guaranteed income for life
- Larger payments, but no beneficiary benefits
Each option has its pros and cons. If you choose lifetime only, your payments will be larger, but you might not see the full return on your premium. With the guaranteed period of time option, you'll get payments for a set amount of time — typically 10, 15 or 20 years. And if you die during this period, remaining payouts will go to your beneficiaries.
If you choose life with a guaranteed period of time, you'll also get payments for a set amount of time, with remaining payouts going to your beneficiaries if you die. But if you outlive the set period, you'll continue to get payments for the rest of your life.
Consider what happens to your money when you die.
Like with all retirement planning, it's important to consider what will happen to your hard-earned money when you die. Is someone you love depending on the money you placed in your immediate annuity?
If so, lifetime only might not be the best option, since payments end when you die. With other options, like guaranteed period of time or life with a guaranteed period of time, payouts can continue to your heirs or surviving spouse after you pass.
Start your immediate annuity whenever it's right for you.
A steady paycheck doesn't have to stop just because you're retired. With an immediate annuity, you can start receiving a reliable paycheck again whenever you want.
Once you've paid in your lump sum, your payouts will start right away or within one year. That's why people usually buy immediate annuities right as they approach retirement.
But even if you've been retired for a while, an immediate annuity can help. Whether you underestimated the full costs of retirement or got hit with unexpected expenses, an immediate annuity can help you get back on track.
We can help.
We know it's a lot to think about. Whatever you decide should be based on your unique situation and what's important to you.
If you'd like to read more about what we have to offer, visit our immediate annuity page. Or, if you'd like to speak with a Retirement Income Specialist to go over these options with you, call us at 800-531-3392.