Three Questions to Ask Yourself Before You Buy an Annuity

Kingdom Gold  > Buying annuities, Cash for structured settlements, Novation structured settlements >  Three Questions to Ask Yourself Before You Buy an Annuity

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There is quite a bit of debate over whether or not annuities are a smart option. Some think that they are worthwhile and a smart investment, some feel that they are antiquated and not lucrative, and others only recommend certain types of annuities. What are annuities? In the simplest terms, an annuity is an insurance product, and the main reason people look into buying annuities is to help manage their money in retirement, but whether or not an annuity is right for you depends on your goals and future needs. Here are three questions to ask yourself if you’re thinking about buying an annuity.

1. When will I need this money?
When it comes to buying annuities, the main thing you need to keep in mind is that you won’t have access to the funds in it for a certain amount of time. The target date for these is usually retirement age, and withdrawing an annuity lump sum payment before that date could result in a slew of penalties and charges.

2. What type of payout will benefit me?
Different types of annuities have different payout schedules, which needs to be decided ahead of time. You can opt for periods of income payments (say, five or 30 years). With variable or fixed annuities, you can choose to receive payments for the remainder of your lifetime. If you have a beneficiary who you would like to receive payments from the annuity after your death, that can be arranged as well.

3. What are my goals?
Think carefully about what your goals for the annuity are. Are you using it as a tax shelter for retirement funds? Will you depend on the annuity after retirement as a significant source of income? When do you plan to retire? There are plenty of other things to consider (perhaps most uncomfortable is trying to figure out how long you’ll live), but try to make educated guesses and plans.

Do you have an annuity? Why or why isn’t it working for you? Let us know in the comments.
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