Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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Planning for retirement is often talked about but many times it does not get the attention it needs. Having an income source when you retire is critical for life’s basics, and therefore it requires planning.

Everyone needs to think about preparing for the future and should consider the possibility of owning an annuity.

Enter your zip code into the free tool box and get online annuity rates today!

Since annuities can provide you with a monthly source of income, they are a good choice for many people. The only real risk to the annuity is living long enough to collect on the payout. If you are in poor health or have some valid medical concerns about your longevity, then annuities may not be a good option for you.

Married couples can extend their annuity benefit by purchasing a joint-life annuity. That allows the annuity to carry over to either spouse until both spouses are deceased, maximizing the investment of the initial annuity.

Being Single and Owning an Annuity

Single people are valid candidates for annuities provided they do not have any reason to expect a reduced natural life span. People are living longer these days, and so unless you have a genetic disease or medical condition that is apparent, there is a good chance you will live into your eighties, if not longer.

Although there is no guarantee you will not meet with some tragedy that takes your life earlier rather than later, there is a high likeliness that you will live to retirement age. Once you retire, you still need to pay for your basic living necessities and expenses so, you need a retirement plan.

You can buy a fixed annuity or a variable annuity to add to your future retirement plans. Provided you live long enough to benefit from the payout of the annuity, you will be able to receive income off of it on a monthly basis.
A fixed annuity will give you a guaranteed amount of money every month while a variable annuity will pay you a different income amount each month, depending on the current rate. Either annuity is good for a single individual.

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Being Married and Owning an Annuity

Different types of annuities are best for different people at various phases in life. As a married person, you have a responsibility to yourself as well as your spouse for retirement planning. You can each purchase an annuity separately, but that is not usually the most cost effective method. Instead, you should consider a joint annuity.

By purchasing a joint-life annuity, you do not need to worry about outliving your annuity provided your spouse outlives you. With a joint annuity, benefits will continue to payout to the remaining spouse until both spouses are deceased.

Since single owner annuities desist paying out benefits upon the annuity owner’s death, married people would not receive any benefit for their spouse’s annuity without a joint-life annuity. Owning the annuity together is the only way to ensure your investment gets fully utilized by both parties until final survivorship.

Having Dependents and Owning an Annuity

Owning an annuity is a viable option for all people to consider. However, it is important to understand that, unlike other investment scenarios, there is no beneficiary to an annuity. Once you die, your monthly annuity payouts cease and the annuity is null and void.

In the case where you die before you maximized your annuity and actually have more invested than you collected, there is no refund for your dependents. The insurance company keeps everything that you paid into your annuity, in essence making the insurance company your sole beneficiary.

If you have dependents and you own an annuity, you need to consider the implications of what happens to your investment money after you die. Unlike life insurance or 401k accounts, annuities do not have named beneficiaries.

For example, if you pay $30,000 into an annuity and you die before you start collecting income from it, that $30,000 stays with the insurance company. It does not go to your children or any other person or organization you would like to name as your beneficiaries.

That is another reason it is important not to rely strictly on annuities for your retirement portfolio. Annuities may have their place in your financial future, but you need to consider your dependents in your life planning as well.
Annuities are a long term investment and may not be for everyone. Single people, married people, and people with dependents should own an annuity if it is right for them. It is just important to understand how annuities work so that you make the right choice for your financial decision. Start planning your retirement now and enter your zip code to get different annity rates and quotes for your financial life planning.