As the word suggests, an annuity is afixed amount of money you get each year from an insurance company. Having an annuity is great for having a steady and reliable income, especially after you have stopped working. In order to have an annuity, though, you need to first fund it, which can be difficult if you have just retired.
Use Retirement Account Assets
Just because you aren’t working anymore does not mean that you don’t have any assets. In addition to any assets you have leftover from your working years,retirement accounts are also assets. You can use these accounts to help fund annuity and build the amount of income you will have throughout retirement.
Use Proceeds From a Home Sale
If you don’t want to cut into existing funds, you will need to find the money to fund an annuity elsewhere. One of the best ways to fund an annuity is to liquidate valuable assets like a home. You might have lived in your current home for a long time, making it hard to leave. However, a smaller home is much easier to maintain in your retirement years.
With a smaller home, there is less maintenance and cleaning that you need to take care of as it gets harder for you to keep up with as you age. You also might not be at home as often during retirement since you won’t be tied down by a regular work schedule. Because you may be traveling often, it doesn’t make sense to have a large home sitting vacant most of the time. By selling your current home, you will make a considerable profit that can be used to both purchase a smaller property and fund an annuity.
Use Past Savings
If you have a considerable amount of past savings, you might want to use this to fund an annuity. If you opt to just keep your money in the bank, you will earn very little or no interest. Your money can depreciate over time. By funding an annuity, instead, you can earn a fair interest on your money.
When many people reach retirement, they often believe that they can’t make any more big financial decisions. However, even though you aren’t working anymore, you still have assets and savings to work with. In all stages of life, you can continue to make wise financial decisions and plan better for your future.
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