Annuity

What does it Mean? A financial product sold by financial institutions that is designed to accept and grow funds from an individual and then, upon annuitization, pay out a stream of payments to the individual at a later point in time. Annuities are primarily used as a means of securing a steady cash flow for an individual during their retirement years.
Investopedia Says... Annuities can be structured according to a wide array of details and factors, such as the duration of time that payments from the annuity can be guaranteed to continue. Annuities can be created so that, upon annuitization, payments will continue so long as either the annuitant or their spouse is alive. Alternatively, annuities can be structured to pay out funds for a fixed amount of time, such as 20 years, regardless of how long the annuitant lives.

Annuities can be structured to provide fixed periodic payments to the annuitant or variable payments. The intent of variable annuities is to allow the annuitant to receive greater payments if investments of the annuity fund do well and smaller payments if its investments do poorly. This provides for a less stable cash flow than a fixed annuity, but allows the annuitant to reap the  benefits of strong returns from their fund's investments.

The different ways in which annuities can be structured provide individuals seeking annuities the flexibility to construct an annuity contract that will best meet their needs.

Terms Related Links

Annuitization Method
Deferred Annuity
Guaranteed Death Benefit
Guaranteed Minimum Accumulation Benefit - GMAB
Longevity Risk
Payout Phase
Perpetuity
Qualified Joint And Survivor Annuity - QJSA
Stretch Annuity
Variable Annuity

Terms Related Links
An Overview Of Annuities - These contracts provide a guaranteed income stream. Learn how they work and their benefits.

Break Out Of Annuity Prison - Annuities offer security but also lock up your cash. The secondary market could be your key.

Not All Retirement Accounts Should Be Tax-Deferred - It may be better to leave your assets exposed to the tax man when you're saving to retire.

Anything But Ordinary: Calculating The Present And Future Value Of Annuities - Learn to calculate the present and future value of fixed payments required from you or owed to you.

Getting the Whole Story on Variable Annuities - Variable annuities are another way to save money tax-deferred - but don't jump in blindly!

Passing the Buck: The Hidden Costs of Annuities - These may look like good retirement vehicles, but beware of fees buried in the fine print.

Boost Earnings Through Financial Planning - Meeting more of your clients' needs will help you achieve your financial goals.

Taking The Bite Out Of Annuity Losses - If this investment product has caused you sleepless nights, it's time to consider alternatives.

Stretch Your Retirement Budget - Living comfortably can be easy if you follow a simple plan.

Insure Your Retirement Income - Use this vehicle to make sure your payout lasts as long as you do.





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