Deferred & Immediate Annuities for Instant Post Retirement Income

When a person retires, it is annuity that guarantees him a regular income thereafter. This is the scheme which becomes the source of income for the retirees depending upon what they have saved during their service tenure. This makes the importance of saving money for future very clear. If you take saving money casually, you must not do that. This is because your habit if saving a particular percentage of your salary amount will ultimately give you the opportunity to live conveniently after retirement. Well there are number of schemes that are available, but the two most important types of the scheme include immediate annuities and deferred annuities.



An annuity is defined as the contract between an individual and an insurance company. These are the schemes, which convert the asset of someone into a regular stream of income when he is left with no other earning means. The annuity plan can be purchased with a lump sum or via regular payments of instalments. The payment that one makes while purchasing the scheme becomes the source of earning for the annuitants in later stage of time. Whether it is immediate annuities or deferred annuities scheme, an individual gets a chance to avail these monetary services to ensure comfortable living for themselves and their spouse.



Immediate annuities are the deals involvement in which assures of regular flow of income for the retirees within 12 months from the date of enrolled into them. As soon as you desire to receive the payment, you will begin to get it in this case. In addition, when it comes to immediate annuities, you have the freedom to decide the tenure till which you would be receiving the income. In this case, you can choose to receive the income throughout life or even opt to get it till a specific period of time. The immediate annuities category is further divided into two sub-categories.



The immediate annuities are divided as fixed and variable annuity schemes. The retirees who do not have any other alternative to earn than receiving the annuity income, they generally opt for fixed annuities. In this case, the principal amount is fixed and the annuitant is subject to receive same amount throughout his life or till the specific period he chooses to receive income. The next category of immediate annuities is variable annuity. The retirees who are involved in stock market business keep on making profits and incurring losses. The principal amount, in case of variable annuities, fluctuates depending upon the profit and loss that the individual experiences from time to time. This makes variable annuities riskier. As a result, most of the people opt for fixed ones rather than choosing variable schemes.



Besides immediate annuities, there are deferred annuities that are also present to help the retirees earn a regular income after retirement. The most important benefit that is offered by this scheme is that it is tax-deferred as long as the time when the annuitant starts withdrawing the income. You can buy this plan and keep it preserved for the time when you will actually need it without any fear of having to pay taxes even without availing the income facilities.