What Are Deferred Annuities?
Deferred Annuities are financial products that resemble personal pension plans. You invest money now and decide when to start receiving payments.
They offer several advantages:
- Flexibility in Control: You have more control over your funds.
- Higher Payouts: Potential for higher returns compared to immediate annuities.
- Interest Earning: The ability to accumulate interest over time.
How to Choose a Deferred Annuity?
- Select the Right Plan: Consider plans that align with your financial goals.
- Add an Income Rider: Income riders, also known as Guaranteed Lifetime Withdrawal Benefits, can provide additional financial security.
What is a SPIA?
A Single Premium Immediate Annuity (SPIA) is a financial product where you pay a lump sum in exchange for immediate regular payments.
However, it has limitations:
- Less Flexibility: Once you choose a SPIA, your control over the funds is significantly reduced.
- Fixed Payout: The payout is determined at the start and does not change.
Why Not Choose a Deferred Income Annuity (DIA)?
- Similar to SPIA: A Deferred Income Annuity is much like a SPIA, but the payments start later.
- Loss of Control: Like SPIAs, DIAs also limit your control over the assets.
When choosing between Deferred Annuities and SPIAs, consider the flexibility, control, and potential for higher payouts offered by Deferred Annuities. SPIAs and DIAs, while offering immediate or later income, significantly reduce your control over your assets. For many, maintaining control and flexibility is key to a sound financial plan.
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