Who Would Benefit Most from an Immediate Annuity?

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

What is an immediate annuity?

Immediate annuities, such as Single Premium Immediate Annuities (SPIAs), are best suited for individuals nearing retirement. These annuities provide a steady income stream starting immediately after the initial investment. However, there are alternatives that might offer more flexibility and benefits.

Deferred Annuity with Guaranteed Lifetime Withdrawal Benefit: A Better Option?

  • Control Over Money: Unlike SPIAs, deferred annuities with a guaranteed lifetime withdrawal benefit allow owners to maintain control over their funds.
  • Accumulation of Interest: These annuities permit the accumulation of interest, potentially increasing the value of the investment over time.
  • Cancellation Option: Owners can cancel the annuity if their circumstances change.
  • Increasing Income Option: This can be more advantageous than the cost-of-living adjustment (COLA) benefit offered by some SPIAs, potentially providing higher income over time.
  • Lump-Sum Death Benefit: In the event of the owner’s death, beneficiaries can receive a lump-sum payment, which may not be available with traditional SPIAs.

Immediate Annuity vs Deferred Annuity with GLWB

FeatureImmediate Annuity (SPIA)Deferred Annuity with GLWB
Income StartImmediateDeferred
Control Over FundsLimitedHigh
Interest AccumulationNoneYes
Cancellation OptionNoYes
Income Increase OptionCOLA (if available)Increasing Income
Death BenefitUsually noneLump-sum

Conclusion

For individuals nearing retirement, a deferred annuity with a guaranteed lifetime withdrawal benefit might be more advantageous than an immediate annuity. It offers greater flexibility, growth potential, and investment control. This can align better with the retirement goals of many individuals while providing a reliable income stream. Contact us today for a free quote.

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Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

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

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