Will I outlive my retirement money?
It's a question many of us ask ourselves. After all, it's not easy to know how our retirement investments will continue to perform, how long we'll live or how much we'll actually be spending each month when we're done working. Worry can set in, when you'd rather be excited about what life after work could bring.
Patrick Blevins, a State Farm® agent in Waynesboro, Virginia, helps people ease that worry when he explains how an annuity (which some people refer to as a life annuity) can benefit them in retirement.
Keep in mind, the following information pertains to fixed annuities only. Variable annuities work differently and have an investment risk component.
A paycheck for life
Blevins explains, "A major concern people have about retirement is running out of money. An annuity from State Farm could ensure that you will never outlive your money in retirement.
"One way to have an income you might not outlive is with an immediate annuity. It's purchased with one lump sum, and you start receiving payments pretty much right away. Some companies also offer deferred annuities, where you purchase your annuity with a lump sum but choose a time in the future to start receiving payments."
What if I die too soon?
This is a common concern Blevins hears a lot. "A big misconception is that if I give State Farm, say, $100,000, and I pass away after a couple of payments, State Farm keeps my money. That's not the case with most payout options.
"People who own annuities have a number of choices for their payout period, and probably the most common is the cash refund option. With this option, your beneficiary will receive a lump sum payment based on whatever portion of the initial amount that wasn't paid out to you, so it guarantees the return of principal. On the flip side, if you're still living once your initial investment has been paid out to you, you'll still continue to receive the same monthly payment for however long you live."
How does it fit into my retirement plan?
An annuity can play an important role in a complete financial plan, especially for people who have accumulated monies and are retiring or already retired. As Blevins puts it, "Once customers understand how they can be a puzzle piece to their overall plan, they are really happy with them." Want to learn more? Your own local State Farm agent is here to help.