Who Should Purchase Annuities?

In looking ahead to retirement years, most individuals plan on social security and pension plan benefits from their employers to finance their retirement. But, many experts agree that these items usually provide only about one-half of the average American's pre-retirement income. Many individuals will want to supplement this retirement income. The purchase of annuities is one way to do so, and annuities are most frequently purchased for this purpose.

Annuities may be purchased by individuals who have already accumulated a large estate, individuals who have exhausted 401(k) and IRA opportunities, or who are self-employed and seeking to plan for their retirement. These are just a few examples of appropriate annuity candidates.

Other individuals who may benefit from the purchase of annuities include individuals whose occupations are ones in which a majority of their life's income is earned in a short amount of time, such as professional sports figures and entertainers. A small business owner who lands a big contract, or who sells a portion of his business and has a large inflow of income may consider the purchase of an annuity with these funds. Also, children or surviving spouses who receive a large lump sum payment from a life insurance policy may benefit from purchasing a single premium deferred annuity with the funds and selecting some type of lifetime payout option to ensure the proceeds will last the survivor's lifetime.

You should always review your financial situation, including existing retirement plans or options when discussing the purchase of an annuity