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When you leave the employed pool, you stop receiving the benefits that go with being employed so it’s important that you prepare for this period of your life. Having a steady source of income when you retire is important so you have to prepare for it as early as today. Companies such as Puritan Financial Group can help you find a solution. When it comes to diversifying your investment portfolio, it’s not enough to gear your assets towards financial growth. You also have to take care of your principal. As you grow older, you may not be willing to invest in high-risk ventures so when it comes to investments that will guarantee you returns, an annuity is probably the best option for you.

Immediate Annuities as Opposed to Deferred Annuities

Many retirement planners and investment experts recommend that you transfer a portion of your assets from deferred annuities to immediate annuities. Why? This is because deferred annuities do not promote early withdrawals, which means that you can’t take distributions or withdraw your money before the annuity matures or you will have to pay hefty fines. On the other hand, immediate annuities can provide income as soon as you start making your payments. Because the immediate annuity aims to satisfy the need for retirement income almost instantly, it helps to avoid the possibility of outliving your savings.

When to Buy Immediate Annuities

People in different financial and personal situations can make practical investments out of immediate annuities. An example of this is an individual who used to take part in an employer-sponsored defined-contribution plan. They can take money from their account and make use of the extra cash to purchase and immediate an annuity, which enables the person to add to his guaranteed income flows. There are also companies that can pay for the pension plans with defined benefits through the investments in immediate annuities for the members of the organization. The prospective annuity buyer can also enjoy immediate annuities if he or she has maxed out the contributions to their 401K or IRA.

If you plan to go for an immediate annuity, you have the option to structure payments so that they vary with the performance of a particular set of investments. This is what is referred to as a variable immediate annuity. It is a variation of an immediate annuity with your money being invested in mutual funds and the like. As such, the amount you will get will be based on market conditions. To learn more about the different types of annuities you should contact a company such as Puritan Financial Group.

Because of the changes in its target market such as the popularity of early retirement and possibility of the senior citizen to live longer than people did years ago, products like the immediate annuity have become quite popular. The modern retiree who retires at 60 is more likely to live until his 80s or more, which makes the advantages gained from an immediate retirement annuity important when securing retirement.