If you want a steady income for your golden years that will help you support all the fun you never had time for before you retired, then a retirement pension might be for you. An old-age pension can provide a steady stream of income to supplement your social security and pay for extra travel, dinners and visits to the children who have moved away.
Oftentimes, people who use CD interest to supplement their retirement income find that it just doesn’t cover all of their needs. If they dip into the principal then the interest is lower and eventually they experience an increasing shortage each month. A retirement pension allows you to maintain the same level of income regardless of fluctuations in the prevailing interest rate.
Pensions don’t have to be for spending, they can also be used for saving. When you invest in an annuity, your money is tax protected until you remove it. It can save you hundreds of dollars in taxes and avoid heavy taxation on other forms of income.
The tax advantage of an old-age pension also benefits spouses if one spouse has a high pension but the other has no old-age provision. As long as both spouses are alive, the old-age pension continues to grow. If the spouse with the pension dies, the survivor now has income of their own to replace the pension and Social Security lost on their spouse’s death.
Retirement benefits need not be fixed instruments subject to prevailing inflationary winds. Variable annuities and indexed annuities are also available for those retiring. If you’re annuiting and taking annuity payments, variable annuities and inflation-linked annuities are products to consider, especially if you’re a young retiree.
All old-age pensions have differences. The amount of payment you receive varies from company to company. Even different products within the same company have different returns and annuity payments. When choosing an annuity, you should always compare products from multiple companies. There are internal differences in the products even if you don’t take payments. Some annuities allow you to remove some funds each year with no penalties. Others only allow you to remove the interest.
Before you start buying a retirement annuity, outline what you need in a product. Do you need a monthly income? Do you want a product that keeps up with inflation? You just want tax-privileged growth, but no risks? Once you have decided on the nature of your needs, start comparing pensions. It is helpful to seek the advice of a trained pensions professional when making your final decision.