Fixed Income Annuities – Fixed Rate Annuities

An annuity is a guaranteed life income which you receive after you stop working. You buy an annuity with a cash lump sum which is usually collected throughout your working life in a pension fund. Some people decide to add to this cash sum by selling property or investments before retiring to ensure a better annuity rate and hence a more comfortable retirement.

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There are so many different types of annuity and it is vital that anyone who is considering buying an annuity do their research thoroughly, known as the open market option. This essentially means the right to “shop around” for the best annuity, which research shows can have a dramatic increase on income after retirement. Using an annuity rates calculator, or consulting a team of financial or annuity experts, is a good way of ensuring that you are well informed.

Many people facing retirement consider an annuity with fixed annuity rates. This is an annuity which pays out a fixed amount of income to the retiree for a specified amount of time, sometimes the rest of a person’s life (known as fixed income annuities). The benefits of this is that in this economically uncertain time where the market can be volatile, a fixed income is reliable, secure and guaranteed. This makes retirement planning far easier and is a very attractive option for many retirees looking for certainty.

There are many different types of fixed income annuities. One option is an equity indexed annuity which has the benefits of offering a fixed income whilst also allowing the retiree to take advantage of the market as an investor. This is because this type of fixed annuity pays a minimum interest rate when the market is lower and a bonus income when the market is looking up. For those financially savvy retirees, this can also be an attractive option.

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You can also include your partner in a fixed income annuity which is referred to as a joint annuity. This is beneficial for a partnership that wish to look out for each other and should one person die, the other is financially taken care of.

As a popular choice for many retirees, fixed rate annuities offer the peace of mind and security essential for effective retirement planning.