Retirement Annuity Rates: Finding the Best Ones

Everyone who is considering the purchase of an annuity plan, or even those who already have a retirement plan in place, wants to find the best retirement annuity rate. There are different types of annuities, and a retirement annuity usually a non-qualified annuity that has been purchased from an insurer in exchange for monthly payments from that company. The retirement annuity rate you receive depends on your age, the amount you've invested in the plan, and the period of time over which you expect to receive payments.

When you buy a retirement annuity from an insurer, you make a one-time, lump sum payment. Distributions, or payouts, from the insurer usually start within a month of purchase. Retirement annuity plans can be either fixed or variable in nature. In other words, you can receive the same amount every month, or you can choose to get smaller payments at the beginning and have them increase over time to account for inflation, or your payments can be based on investment options. In the latter case, you assume the risk for how these investments perform. With a variable plan, retirement annuity rates can't be predicted, but some providers do offer a minimum, guaranteed rate of return.


Checking the Retirement Annuity Rate

You can use an immediate annuity calculator to check retirement annuity rates. There are many of the calculators available for use online at no charge. You can also ask a financial adviser to obtain retirement annuity rate quotes from several insurance firms. These quotes will indicate the amount of your monthly payment. The actual interest rate you'll receive will not be shown because the number of total payments is probably unknown, particularly in the case of a lifetime annuity.

A retirement annuity rate quote may appear very low - at around two percent in many cases. The security associated with a retirement annuity plan makes up for the low rate, however. These plans guarantee that you will not outlive the money you have in the plan. The insurance firm that sells the retirement annuity is taking a large risk and provides a low rate that is linked to life expectancy.


Retirement Annuity Rates and Older Retirees

For individuals aged 70 or older, it is unlikely that they can find a way to obtain a source for more or safer income than that provided with a retirement annuity, as long as these plans are purchased from top-rated insurer. The retirement annuity rate may be low, but the monthly payouts possible are not likely to be matched in security by any other alternative. These payments are tax-free as well, until the entire premium paid into the plan is recovered.


For more information from Steven on how to invest in annuities and common investment mistakes, visit his Annuities Investment Guide. To learn more about the retirement annuities, visit the Immediate Annuity and Deferred Annuity Guides.