Annuities Definition

Let's try to look at the annuities definition so that you will have a better understanding if they are the right solution for you or not as you are preparing your retirement planning.

None of us have any idea how long we will live after retirement. Since we don't know it makes it virtually impossible to know exactly how much money we will need to set aside prior to retirement.

The history of annuities reaches all the way back to ancient Rome…

Trying to the understand the annuities definition is a potential way of trying to solve that problem.

The history of annuities reaches all the way back to ancient Rome, nearly eighteen hundred years ago!

Most typically an annuity is a promise to provide a stream of payments to you for an upfront payment made to the annuity. Of course this is a very simplified definition, and there are many types of annuities, but I hope this gives you an idea.

The formula includes determining the average life span of individuals…

Again, the real problem has always been trying to determine how long someone would live once they began collecting on the annuity.

As we dig into the annuities definition part of the formula includes determining the average life span of individuals which is part of the annuity calculations.

As people live longer, which we are, the cost of an annuity will be corresponding to that data.

The best way to look at an annuity is to view it like an insurance policy. Just like car insurance if you pay into and never have an accident it was necessary but still expensive.

You have peace of mind but it came at an expense!

If you have a life insurance policy and pay into every month and don't die, you have peace of mind but it came at an expense.

Even thought there are many types of annuities the bottom line is that you are counting on receiving some type of payment(s) in the future. Some annuities may pay your beneficiary and some may not. The more you have a guarantee of you or your beneficiary receiving monies in the future the more it will cost you.

Imagine that!

Almost like going to Las Vegas. The smaller the risk of your bet is, the smaller the payout! The bigger the risk, the bigger the payout!

So again, as we try to understand the annuities definition the entire process depends on the risk you want to take. As I continue to add articles on retirement planning to my website, I hope to be able to answer all these questions for you.

Good Luck and May God Bless You!

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