annuitization | Annuities

Die Broke

How Do I Organize My Money to Spend My Last Dollar the Day I Die? asked the investor And the advisor said, “That’s no problem, Sir. What day will that be?” Not knowing when we’ll die means making sure we arrange our finances to produce income for as long as we live. Aside from being able to live off just the earnings of our investments, only social security, pensions and annuities can pay you a lifetime income. We would all like to have jut enough money to last until our last day and die broke. While that seems like a wild idea, it’s doable. Social Security gives you a lifetime income because the government can compel taxpayers to pay for it. And, if things get tight, they can print the money necessary to pay you. And it stops the day you die. If you do get a pension, it’s likely being paid by an insurance company in the form of an annuity. As long as the insurance company remains solvent (large companies such as Prudential and New York LIfe lent money to the federal government during the Depression), you receive income for life that stops the day you die. If you like that idea, making [...]

Should You Annuitize your Insurance Annuity?

What does it mean? Put simply, to annuitize is to start taking payments from an insurance annuity that may have been accumulating for some time. Specifically, you “trade” the accumulated annuity balance for a stream of payments over a specific term of years or life (a life annuity). An annuity, a policy that is paid into either by lump some or regular payments by the policyholder, and gains value via investment of those funds by the insurance company that holds the policy, in a manner agreed between the two parties, has many terms attached when it is created, and there may be an option to annuitize at a certain point or date set at the start of the insurance annuity agreement. What happens when I annuitize? When, and how, the policy becomes annuitized is determined by the rules and terms that are agreed by the policyholder with the insurance company, and these can be varied and dependent on many different factors. If the policy has a number of different options at which annuitization can take place, then it is up to the policyholder to decide what is best for him or her. In many cases, if the insurance company does not hear [...]