Retirement & Financial Planning Report

With people living longer and, in many cases, retiring earlier, a retirement fund might have to last for many decades. There’s a chance that you might run out of money, or at least run dangerously low, during an extended retirement.

If that’s a concern, one possible answer is to buy an immediate annuity, which can pay you a lifetime income, no matter how long you live. For a married couple, an immediate annuity can last as long as either spouse is still alive.

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Many people think an “annuity” is a deferred annuity. In this type of annuity, you pay premiums and let any earnings build up, untaxed. Eventually, you can tap a deferred annuity and pay the tax.

Instead of a deferred annuity, you can buy an immediate annuity. With an immediate annuity, there is no investment buildup. You give a sizable lump-sum to a financial institution and you get a stream of cash flow, starting right away. This is one of the options in the TSP program.

When you buy an immediate annuity outside of a tax-deferred retirement account, your payments will be partly taxable and partly untaxed. The financial firm will calculate how much of each payment is a tax-free return of your investment and issue a report you can use to pay the tax.

Deferred Annuity Has Attraction for Some

Leaving Government Before Being Eligible for an Annuity

TSP Annuity vs. Installment Payments

FERS Retirement Guide 2020