Annuities for Life

The duration of the disbursements can also vary. You can choose to receive payments for a set period, say 15 years or so, or for the rest of your life, and you could set it up to pay after you die to a surviving spouse. Of course, securing a lifetime of payments can lower the amount of each check, but it helps ensure that you don't outlive your assets, which is one of the main selling points of annuities.

Money if you live into your 80s or beyond. There are three major types of annuities: fixed, variable, and indexed, and each has its own pluses and minuses relative to your situation and goals. Details for each of these annuity types and where they might best apply are beyond the scope of this brief article.

A little Annuity primer here: An annuity is a contract between an individual and an insurance company. You pay the insurance company a considerable lump sum or a series of payments, and, in return, in the future (retirement is usually the case), you receive regular disbursements of a guaranteed amount for the rest of your life. Disbursements can begin immediately or at some point in the future. Annuities come in three main varieties—fixed, variable, and indexed—each with its own level of risk and payout potential. The income you receive from an annuity is typically taxed at regular income tax rates, not long-term capital gains rates, which are usually lower.