Income you can count on
You'll probably have some guaranteed income in retirement from Social Security and perhaps a pension.
But if that's not enough to cover your most basic needs—food, clothing, utilities, medical expenses, and a place to live—then consider using some of your retirement savings to buy an annuity.
Annuities offer ongoing income that will last as long as you live.* You can even purchase an annuity that will last throughout your spouse's lifetime, continue paying your beneficiaries if you die within a certain time frame, or increase payments to keep up with inflation.
To reduce both the risk of outliving your savings and the cost to purchase the annuity, you could consider buying an annuity that won't begin paying out until a later date—say, when you turn age 80.
Annuities are insurance contracts that build in costs to cover the payment guarantees, and with some types of annuities, you can't change your mind and get your money back. So you should only use part of your retirement savings to buy one—just enough to cover your essential expenses.
2 types of annuities to consider
Fixed income annuity
These annuities offer you a steady payment that will last as long as you live or for a certain number of years. You can start receiving payments as soon as a month after your purchase or as late as age 85.
When you buy an income annuity, you turn over a lump sum in exchange for the payments, and you usually won't have access to that money anymore.
Deferred variable annuity with a guaranteed lifetime withdrawal benefit
If you want to keep control over the money you invest in an annuity, consider a deferred variable annuity with a guaranteed lifetime withdrawal benefit rider. As with an income annuity, your payments are guaranteed—but you won't lose access to your money.
You can direct your money to specific investments, giving you the opportunity to benefit from market gains. And you can make withdrawals at any time (although withdrawals that exceed your maximum annual withdrawal amount will reduce your future payments).
While market gains will increase your payout amounts, market losses won't cause them to drop below a certain level.
Spending your savings can be a lot more complicated than building them up. And many decisions you make at this stage are difficult or impossible to reverse. We can help you make the most of your money.
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