Retirement annuities are a means to enhance the post-retirement sources of money. The actual requirements post-retirement would depend on a number of factors like one’s financial condition at the time of retirement, whether one has a pension, what the lifestyle one wishes to maintain, one’s health, and a host of other personal considerations. To meet the different needs in the annuity market, insurance companies have come up with various types of features to suit the varying market demands.

Surveys to assess the perception about annuity in the potential buyers have thrown up some interesting insights. One is that 60% of those aged 55 and above place great importance on a guaranteed income to supplement their incomes from other sources.

Most writers who answer the queries of buyers are strongly supportive of the findings. However, there is no doubt about the immense good in retirement annuities and the way to overcome the complexities is simply go to the simpler ones that provides reliable income that one cannot out live.

An immediate annuity is one in which the buyer hands over a fixed amount of money to the insurance company who in return make a monthly payment that would start immediately continuing for the rest of their lives. An example would make the working more explicit. Let’s say that a 65-year old man buys an immediate annuity by paying in $100,000 would draw an amount of $560 a month for life. Similarly, a 65-year-old lady who has an identical annuity would be drawing $530 a month for her life and a 65-year-old couple could expect to get an amount of $470 a month as long as either one is alive. There, variations to the above simplest are a fixed income or a variable income; another is deferred annuity. In a deferred annuity, one allows the interest on the investment to accrue, tax-deferred, for a fixed period or till one attains a particular age, allowing the investment to grow faster. The returns can be fixed or variable. The return is guaranteed by the insurance company selling the annuity.

Longevity or variable retirement annuities, on the other hand, start monthly disbursement at a much later date, predetermined at the buying. The delay can be 10 to 20 years in the future. The underlying working principles of the two types of retirement annuities are the same. As an example take the case of a 65-year-old man investing $50,000 in a longevity annuity with the payments to start 20 years later than the date of purchase will get monthly payments of $2,000 for life beginning at age 85 years. A woman of similar age and making the similar investment will draw $1,600 and a man and woman couple with similar annuity would receive $1,125. Longevity annuity provides greater security to spend from your savings in early retirement as longevity annuity will cut in later life. This type of annuity also has an option to draw the advantages of tax deferral. This complicates the system so much one would need expert consultants to help one to reap the benefits avoiding the many pitfalls.

No investment is ever risk-free. The risk involved in both types of retirement annuities is that you stand to lose your investment if one dies before one has expected to. In an immediate annuity, you lose relatively less if one has received a fair amount of installments. In longevity annuity, one can lose the entire investment. One should do enough research and due diligence before investing in an annuity. It is normally recommended that retirement annuities should be part of overall investment planning to complement other investments.

Top retirement annuities are insurance companies who have certain qualifying attributes to reach that position where they can be called “Top Retirement Annuities.” It is always better to give the attributes than specify half a dozen companies so consumers can choose the company that suits them best. All these have high ratings of financial strength from the well-known rating agencies like A.M. Best; S&P; Moody’s; Street.com. Some even have A.M. Best A++; S&PAAA; Moody’s Aa1; Street.com A. One should have at least two best rating from any two. Another is the high and consistent payments they make per month and in the short duration of five years.