What is the best age to purchase an annuity?

Generally speaking, the best time to purchase an annuity intended to generate lifetime income is 10 years prior to taking lifetime income payments. So if your desired retirement age is 65, you should purchase your income annuity at age 55 or shortly thereafter to maximize the benefits provided by lifetime income riders.

Do income annuities have fees?

Immediate annuities do not have a fee; however, the more commonly used optionally lifetime income riders do come at a cost. Fees range from 95 basis points to 150 basis points (.95% to 1.50%).

Are there different types of income annuities?

In order to be qualified as an annuity, every annuity contract must have the ability to be turned into a guaranteed lifetime income. However, many types of annuities are designed specifically for accumulation. Income Annuities are contracts you purchase to generate a lifetime income stream in the most efficient and cost-effective manner. The 4 types of income annuities are: 1. Immediate annuity (provides guaranteed, lifelong income starting 1-12 months after purchase) 2. Deferred Immediate Annuity (DIA), or Longevity, annuity (provides guaranteed, lifelong income starting 2-40 years after purchase) 3. Qualified Longevity Annuity Contract or QLAC (a longevity annuity purchased with IRA funds starting after age 72) 4. Deferred annuity with a lifetime income rider