Delaying an annuity can lead to significant financial consequences. The longer an individual waits to begin receiving annuity payments, the lower the monthly payout will be. This is because annuities are typically designed to provide a steady stream of income for the rest of a person’s life, and the longer the payments are delayed, the fewer payments there will be overall.
For example, let’s say an individual has a $500,000 annuity and decides to delay receiving payments for 5 years. Assuming a 6% annual return, the monthly payout at age 65 would be approximately $2,482. However, if the individual waits until age 70 to start receiving payments, the monthly payout would drop to around $2,180 – a 12% decrease.
Moreover, delaying an annuity can also result in missed opportunities for growth. Annuities typically offer a guaranteed rate of return, which can be especially beneficial in times of market volatility. By delaying payments, an individual would miss out on potential growth and may not be able to take full advantage of the guaranteed rate of return.
In addition, delaying an annuity could also have tax implications. Depending on the type of annuity, the payments may be subject to income tax. If the individual waits until a later age when they may have a higher income, they could end up paying more in taxes on the annuity payments.
Overall, the cost of delaying an annuity can add up over time. It is important to carefully consider the potential consequences and consult with a financial advisor before making any decisions about when to begin receiving annuity payments.
Social security is an annuity but will it be around in the amount that you’ll need when it is your turn to receive payments? Does it compete with inflation today and will it compete with inflation tomorrow?
To learn more about annuities, simply text “annuity” at 678-736-6496 or send us a message at Info@ShatekaHusser.com.
