Saving for Retirement (regardless of your current age)

This post is all about saving for the future. It has often been said that Social Security will not be around when certain generations reach retirement age. Even if that turns out to be false, Social Security will never match what you were earning during your peak working years. A wise person does not depend upon other people or put all of the eggs in one basket. Your retirement is on you. It is not the responsibility of your kids. When you drag children into this harsh world, you cause them to need those expensive diapers and school fees. They do not owe you for a situation you put them in.

A lot of people are scared of investing. The prospect of actually being able to lose money is terrifying to them. I recently did a little research on annuities. An annuity might be right for someone who is an “investment chicken”. An annuity is a contract between you and an insurance company. You give them a lump sum of money, and in return, they give you a monthly income (either starting immediately or starting on a future date). If you are close to retirement, an immediate annuity is best for you. With the immediate annuity, your checks begin immediately. If you are younger, a deferred annuity is the better option. A deferred annuity accumulates money and then starts paying you the monthly income at a future date. Within these two annuity categories, there are two subtypes (fixed or variable). A fixed annuity pays a set amount of money. You know what you are going to be getting and this security is comforting to some people. A variable annuity is tied to the performance of investments. Basically, the insurance company takes your money and invests it. You have the option to make more money with a variable annuity, but you also stand to do worse depending on the market. However, your loses will not go below a certain point. It is not as risky as going at it on your own.

Annuities get a lot of hate on the Internet. The main reason a lot of people don’t like them is due to high fees and the fact that you stand to gain more money with other types of retirement investments. Fees vary depending on the type of annuity you get and which insurance company you go with. A lot of people who get duped with high fees should have done more careful reading before signing on the dotted line. It is also true that annuities are not as lucrative as other retirement investments. But, it is a little more secure as well. I don’t think that annuities deserve all of the hate that they receive.

Another annuity option is the charitable annuity. In a charitable annuity, the charitable organization takes the place of the insurance company. You give the lump sum to the charitable organization and they pay you a monthly income for life or for a set number of years. As usual, you have to read the fine print and make a wise choice. And it is not the most lucrative of options. But, if you have an organization you really believe in (such as the university you graduated from or a local hospital), then this could be a decent choice for you.

Everyone’s situation is different and I am not a financial adviser. As with anything else in life, you have to do some research and decide what is important to you. As for me, I find the idea of charitable annuities to be fascinating. So, I will do more research on that. Have a great week!

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