If you want a steady income for your golden years that helps to support all the fun you never had time for before you retired, then a retirement annuity may be just the item you need. A retirement annuity can supply a steady stream of income to supplement your social security and provide for extra travel, dinners out and visit to the children who moved away.
Often people that use CD interest as a supplement for their retirement income, find that it simply doesn't cover all their needs. If they dip into the principal, then the interest is lower and finally they experience a growing shortage every month. A retirement annuity allows you to maintain the same income level regardless of the fluctuations in the prevailing interest rate.
Retirement annuities don't have to be for spending, they can be for saving also. If you invest in a retirement annuity, your money is tax sheltered until you remove it. It can save you hundreds of dollars in taxes and prevent high taxation of other forms of income.
The tax sheltering of a retirement annuity is also beneficial to spouses where one spouse has a high pension but the other has no retirement funds. While both spouses are alive, the retirement annuity continues to grow. If the spouse with the pension passes, the survivor now has their own income to replace the pension and social security lost when their spouse passed.
Retirement annuities don't have to be fixed instruments that are subject to the prevailing winds of inflation. Variable annuities and indexed annuities are also available for those who retire. If you annuitize the annuity and take it in payment form, variable annuities and inflation-indexed annuities are products that you should consider, particularly if you're a young retiree.
There are differences in all retirement annuities. The amount of payment you receive varies from company to company. Even different products within the same company have different rates of return and annuity payments. You always should compare several companies' products when you select a retirement annuity. There are interior differences on the products also if you don't take payments. Some retirement annuities allow you to remove some funds every year without penalties. Others only allow you to remove the interest.
Outline what you need in a product before you begin to shop for a retirement annuity. Do you need to have a monthly income? Do you want a product that keeps pace with inflation? Do you simply want tax sheltered growth but don't want any risks? Once you decide on the type of needs you have, begin to compare retirement annuities. It helps to have the advice of a trained annuity specialist when you make your final decision.