Throughout a person’s working career they should be saving up money for retirement. This is usually in some sort of 401k or Simple IRA plan set up through the employer. Every pay period the worker will have a small amount taken out before taxes, and invested into the market. A good company will also match a portion of the money, so while an employee will only see a drop of maybe 3% in their earnings, before taxes, the amount put into the investment will actually be 5 or 6% of their earnings. After a full working career of perhaps 30 or 40 years, the retirement account will have grown to a substantial size, and upon departure from the company a person has many options of what to do with the money.
For those who want to maintain a steady income stream through their retirement years, a single premium immediate annuity might just be in their best interest. Annuities work in two stages. The accumulation stage is when people are putting money into the account. A person could open an annuity while they are young, and then over the years contribute to it. In many cases the money is accumulated elsewhere, and the accumulation period is really only one large lump sum. The second stage of an annuity is the distribution stage. This is when the company selling the annuity calculates how long the person should live statistically; they then pay the money back to the annuitant a little at a time. By providing them with a steady stream of income the retiree does not have to worry about having enough money to make it to the end of the month.
Once a person decides that a single premium immediate annuity is the right thing for their money the decision making process is not yet over. There are several different ways a person can take their money. The most common is a single life annuity. This will provide income as long as the annuitant is alive, when he or she passes the income stops. Since that has too many uncertainties for a lot of people, annuity companies will also offer period certain payments. This means that regardless of who is alive, the annuity will pay for a certain period of years. Accompanied by half to survivor or two-thirds to survivor, the individual has a great number of options on how long they feel their money should last.
