We all dream of living a financially independent, peaceful, and stress-free retired life, don’t we? Many people start saving a small amount from the moment they get their first salary and invest in different investment schemes to build a corpus for the future. And while there are plenty of investment options that you can choose from, one of the best plans you can invest in is an annuity plan. These plans offer regular income during your old age after hanging your boots.
While investing in annuity plans is an excellent way to live a peaceful life after retirement, many people have several misconceptions about such plans. So, to help you make the right investment choice, we list down a few myths and facts behind them.
Annuity plans are complicated and challenging to understand.
While some annuity plans may be hard to understand, others are simple. You can easily purchase an annuity plan to suit your specific retirement goals. For example, if you are looking for a steady income stream after retiring, you can buy a fixed annuity plan.
In these plans, you can pay the premium parodically. When you retire and the annuity matures, you receive regular payments in the form of interest that your investment has accrued over the years.
An annuity is unnecessary if you have sufficient savings
Many people have apprehensions about annuity plans since it involves investing money and fear losing their hard-earned money. They believe that if they have savings, they need not worry about taking care of their future expenses. However, such beliefs can be detrimental to your financial health, and you may risk facing financial stress in your old age.
Considering the rising inflation and the rising cost of healthcare, you cannot rely on your savings alone to meet your everyday and emergency expenses. It would help if you had a supplementary income, which you could get from annuity plans. This way, you can get a regular income even after you retire and keep your savings intact.
Annuity plans are expensive.
The cost of an annuity depends entirely on the type of plan you buy. So, while some plans could be expensive, others are affordable. You can start investing a small portion of your annuity investment in the equity market. This will allow you to grow your investment over the period and get a steady income post-retirement.
Annuity plans may impact my legacy
Most people worry about what they can leave behind for their children. Since buying an annuity plan requires a significant investment, they fear it could impact their ability to leave wealth behind for the next generation.
But the truth is, an annuity plan is not just about investment. It also gives you protection against the uncertainties of life. If something happens to you, the family members will receive the death benefits and the payout from the investment in a lump sum. Thus, you can leave these investments for your children and leave a good legacy.
Now that you know the myths and facts about annuity plans, do your due diligence and don’t believe the various information you may get online. If you have any doubt, it is better to consult an expert financial advisor and get clarity before buying an annuity plan. It is a sure-fire way to secure your financial future.