The Annuity vs Lump Sum: Why the Annuity is Better

Shawn Plummer

CEO, The Annuity Expert

There are a lot of options out there when it comes to retirement planning. One of the most important decisions is a lump sum or an annuity. Most people opt for the lump sum, but this may not be your best decision. This guide will discuss the benefits of an annuity instead of a lump sum payout from your retirement plan.

Why The Annuity Is Better Than The Lump Sum Payout

The first benefit of an annuity is that you will have a guaranteed income for life. This is important because it gives you peace of mind knowing that you will never outlive your money. With a lump sum, there is always the risk of running out of money if you live a long life.

Another benefit of the annuity is that it can help you keep up with inflation. With a lump sum, your purchasing power will decrease as prices increase. This is not a problem with an annuity because your payments and the cost of living will increase.

Finally, taking an annuity can help to reduce your taxes in retirement. If you take a lump sum, you will be taxed on the entire amount. With an annuity, you will only be taxed on the payments you receive each year. This can result in substantial tax savings over time.

Lump Sum vs. Annuity Calculator

Pension Lump Sum Calculator

To determine how much lifetime income you can receive from a new annuity with a guaranteed lifetime income rider, use this pension annuity calculator specifically for those who choose the lump sum payout option.

Bottom Line

Annuities offer retirees several essential benefits that can be hard to find elsewhere. As you can see, many good reasons exist to choose an annuity over a lump sum in retirement. If you want more information or want to discuss whether an annuity is right for you, please don’t hesitate to contact us. We would be happy to provide you with a quote and answer any questions you may have about this valuable retirement tool. Thank you for reading!

Annuity Vs. Lump Sum

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Frequently Asked Questions

Which is better annuity or lump sum?

The best option between an annuity and a lump sum depends on an individual’s financial goals and needs.

How to decide between lump sum or annuity?

The decision between a lump sum and annuity depends on factors such as financial goals, spending needs, investment knowledge, and personal risk tolerance. Seeking professional financial advice is recommended.

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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