For many consumers, retirement signifies a time that is synonymous with stability, relaxation, and security. However, for many, this means ensuring that the investments made during younger years in life were in fact the right choice. If the wrong choices were made in investments, retirement might not be marked by financial security and stability. Instead, it could be a time of worry and stress.
A guaranteed annuity is one way for consumers to give themselves financial stability and security during their retirement years. There are several benefits to choosing a guaranteed annuity, none of which is larger than the idea that the consumer can retire in peace, knowing that they are ensured payments from their annuity.
A guaranteed annuity functions much the same way that it sounds. It ensures that the investor will receive payments for a certain, predetermined period of time. If the consumer is still alive after the payment period ends, they still continue to receive payments. However, in order to receive the guaranteed annuity rate, the consumer must have kept and held the annuity contract until the end of the guaranteed period.
There is another version of a guaranteed annuity, the modified guaranteed annuity, which offers another option for consumers. This kind of guaranteed annuity functions a little bit differently in that it ensures that payments will be made for a predetermined period of time and in a specific amount. This means that the payment distribution period needs to be decided upon beforehand. It can be five, seven or can even extend to ten years. A modified guaranteed annuity can be affected by market changes and fluctuations. This means that if the consumer chooses to release funds early, the contract value may not be the same and may be far less valuable. On the other side, the value may have actually increased. The market fluctuations can move in either direction.
Another rather large benefit of investing in a guaranteed annuity is the idea that payments last for the period of time determined, even if the investor dies before the refund period ends. If payments have already begun when the investor dies, the future payments of the guaranteed annuity are paid out to the beneficiary of the policy holder. This can be a huge benefit for those consumers who are not only trying to promote their own financial stability, but also the stability of their spouse or other close loved one.