For most of us, our 401(k) plan in conjunction with some savvy savings is what we are depending on to fund our golden years. A few lucky individuals also have a traditional pension, but fewer and fewer people will have this benefit to rely on. So, how do you go about replacing the steady income a pension used to provide? The answer may lie in annuities.[See The 10 Best Places to Retire in 2012.]
An annuity is designed to provide you with a monthly income each and every month until you die. It’s an agreement between you and the policy issuer that provides a set monthly payment for a predefined time period if you pay the issuer in advance for this service. Annuities were designed as a safety net to ensure that you do not outlive your money.
Fixed annuities are generally considered a conservative investment, meaning they carry little risk. This makes them particularly attractive to retirees. Here are several traits that make annuities an attractive retirement savings vehicle:
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