Pros and Cons of Annuity Financing
Having more than one method of paying for your retirement is a good idea but getting started with research and money can be a hassle. When you are looking into different retirement plan options, such as annuity financing, it is a good idea to keep in mind the pros and cons of many different plans. An annuity is an agreement between yourself and an insurance company where you pay money in during the accumulation period and then get the money paid back to you during the amortization period.
Annuity financing can give you a guaranteed monthly amount from your retirement until your death, your beneficiaries death or until the fund runs out, depending on the terms you have set with the insurance company. You can also set your annuity to pay out a set amount to cover your set finances once you hit the amortization period. For instance, if your mortgage is a grand a month, then you can have your annuity send you a grand each month to always have rent taken care of during your retirement. You can then use your other retirement options, like 401k, to cover your fun money, earn more in the market for longer and other expenses.
As good as annuities can be, there are still some cons to take into consideration. One of these cons is that it can be difficult, or expensive, to get the money back from an annuity if you need it. This means that if you lose your job or have unexpected medical expenses before retirement, you will probably not be able to use the money you put into your annuity. Another con is that you can face a lot of fees with annuities, especially if you do not understand the whole process and all the terms. Knowing how to navigate the terminology and fee schedule can really help make this a viable option for your needs.
Annuity financing can be an important part of your retirement planning, if you know and understand the terms before you sign up. This process can give you a set amount of money each month until the terms of the fund run out. For instance, the payments can go until your death or until the death of your beneficiary. It is important to understand the fee schedule and how an annuity can work with other retirement savings options before you sign any paperwork.