Income Now vs. Income Later

Key Takeaways

• Retirement income needs do not begin at the same time for everyone.
• Immediate and deferred income solutions serve different planning purposes.
• Determining the right timing to start income depends on factors including age, health, expenses, and other income sources.

Not all retirees need income to start at the same time. Some need income immediately upon retiring, while others have the flexibility to let assets grow before beginning income withdrawals.

Different types of annuities are designed to meet a range of income needs and timing preferences. Immediate-income solutions often are used to replace a paycheck quickly, providing a steady stream of income starting within the first year of retirement. Deferred-income annuities, on the other hand, are designed to grow assets before turning on an income stream later, with the potential for higher income payouts in the future.

Some annuities also offer rising income options that increase income payouts over time, helping offset the impacts of rising healthcare costs and inflation. Deciding between income now or income later depends on age, health status, spending needs, and other sources of retirement income.

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Disclosures:

This material is provided for educational purposes only and does not constitute investment, legal, tax, or insurance advice. It should not be relied upon as a recommendation to purchase, sell, or exchange any security or insurance product. Investors should consult their financial, tax, and legal professionals before making financial decisions.

Annuities are insurance products issued by insurance companies. Guarantees are subject to the claims paying ability and financial strength of the issuing insurer. Product features, limitations, fees, surrender charges, and availability vary by contract and carrier.