Retirement Annuity – Is There a Return on Investment?

The idea of a retirement annuity is not something new. In fact, it has existed for the last two centuries. According to how annuities used to be, they were products meant for the security of people like clergy and widows.

Nowadays, annuities such as a retirement annuity still serve as security products. They are now better-designed as long-term retirement products. By means of annuitization, you can now accumulate funds on a tax-deferred basis. Most of them are payable over a period of 5 to 10 years, and some are even as long as 20 years. All in all, they guarantee you with an income for life.

There are different types of annuity you can avail of. For one, a fixed annuity would be a much safer investment. Steady as it is, it will not be affected by inflation, stocks and other market prices. It will not benefit or grow, however, in case the market rises and improves. In the end, your annuity payments will remain the same as they were from the start.

If you want your retirement annuity to make more returns, then you can opt for a variable annuity. It is an annuity wherein your payments will vary, depending on where and how much you’ve invested. If the market is trending well, your investment will perform well too. In this way, you can generate lots of earnings to add to your income. However, if the market is performing poorly, you could incur losses. Thus, a weaker market will translate into smaller payments for you.

In order to stake your retirement annuity on a winning investment, you may need to consult a financial planner. This person will provide you will an objective orientation on the market and give you sound advice. For instance, here are some possible scenarios. If you are a single retiree, your best option would be to stick to a fixed annuity. A couple, on the other hand, may have other options. As spouses, one of them could stay with a fixed annuity while the other could invest in a variable annuity.

At any rate, here’s the bottom line. Because a retirement annuity ends with death, it also functions as a death benefit. However, the pay-outs won’t cease and disappear. Once the ‘annuitant’ or recipient dies, the retirement benefit will ‘roll over’ to his or her surviving spouse and/or minor kids. Thus, there will always be a return on investment whether one dies early or whether you outlive your investment.


For information, help and independent financial advice on pension annuity call our specialist team of advisers or visit http://www.retirementpensionannuity.co.uk/