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There are many ways by which you can strengthen your retirement income planning strategies and buffer your funds against inflation with the use of annuities and other insurance products. You may invest a part of your savings into immediate annuities to augment your retirement income, after which you can receive a good payout in the form of monthly checks.

Some annuities can get you 7.6% returns on your investment per year, which are considerable larger than the yields other safe investments like Treasury bonds and Certificates of Deposit or CDs generate. However, sizeable guaranteed returns are only possible with the best insurers. When shopping around for retirement annuities, you should get these products from companies with good financial ratings, and then spread your investment around with a number of lower-priced annuities instead of a single high-priced one. This investment method will help your nest egg recover better in case one annuity provider goes bust.

Inflation is one more thing you need to consider when buying a retirement annuity. Here are some ways to keep the effects of inflation down when you invest in this kind of insurance product, along with their particular pros and cons:

Get an Inflation Rider

An inflation rider, which is an optional annuity feature that guarantees your payouts will increase when the Consumer Price Index fluctuates, may be obtained if you buy an annuity that generates a lower primary payout. The advantage to this additional feature is that you do not have to estimate future rates of inflation and amend your financial strategies to diminish their impact on your nest egg. The downside is that not all insurers are able to provide this rider, and those who do may charge huge fees. This is mainly because even your insurer has no sure way of predicting inflation and recouping expenses in the case of investment losses.

Stagger Your Annuity Purchases

You can also strengthen your investing strategy by buying annuities in stages. For example, you may buy a hundred-thousand-dollar annuity now, and another one with the same value in five years. One benefit of this method is that inflation may result in higher interest rates and better payouts in the future. Even if interest rates do not rise, the payouts will contribute to the longevity of your funds. A five-year investment in one annuity can give you more money to invest in another after five years, although holding out on another annuity for a while will cause missed payouts.

Planning for a more comfortable retirement can be accomplished with the aid of annuities from reputable providers. However stable and guaranteed these investments may be, you will still need to implement the proper retirement income planning methods to guard your investment against inflation and help you make the most out of your annuity.

About the Author:

Katherine Smith is an author who specializes in financial topics concerning seniors. Puritan Financial Group gives seniors reliable investment options, as well as professional financial advice to help them strengthen their retirement income planning strategy. For more information on how Puritan Financial Group can help you, visit our website at http://www.puritanlife.com

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