Picking the Right Payout Option for Your Annuity

Picking the right payout option for your annuity is vital for the success of your retirement. You have 3 different options you can choose from. These include the annuitization method, systematic withdrawal schedule, and a lump sum payment. In this article, we will go over these options so you can find which one will work best for you.

Annuitization Method

When you purchase an annuity then you can begin receiving monthly payments at a later date or immediately. This is known as the annuitization phase. You have two sub options you can choose from to calculate the amount and length of time you will receive these payments. First, is the life option. They calculate these payments on the age and life expectancy of the annuitant. It will provide you with an income stream for your lifetime. This can provide a stable source of income for you during retirement. However, unless you purchase a beneficiary rider, if you die before your life expectancy the insurance company will keep the remaining balance on the account.

Second, is the period certain option. With this option, your annuity benefit will be paid over a set period of time. This could be 10, 15, or 20 years. If you pass before your benefit period is up, your beneficiary will receive those payments for the remaining time.

Systematic Withdrawal Schedule

When picking the right payout option for your annuity you may be interested in the systematic withdrawal schedule. With this method you are not limited to a set amount of money each month. You can take out funds in an amount and frequency that works best for your needs. However, with this you do not have a guarantee of lifelong payments.

Lump Sum Payment

After your interest has accrued you may decide that you want to take the funds out in a lump sum. With this you receive all the invested funds in a one-time payment. You may choose to do this if you are older or in poor health and you want to make sure funds pass to your loved ones.

Successfully Picking the Right Payout Option for Your Annuity

You can successfully pick the right payout option for your annuity. You may want to meet with your financial planner to review your situation to find which is best for you.

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