Financial Planning AnnuitiesWhat Is an Immediate Annuity

This is financial adviser Patrick Munro telling
you today about immediate annuities. Immediate means immediate in the sense of getting your
money in an income stream. Once you have a lump sum of money and you want to keep it
for the future, but you only want to receive a payment that is for your budget, in other
words, you turn it into an immediate annuity. An insurance company is a company that does
this.

For example, if you take a hundred thousand dollars based on your age, you want to receive
an income stream for ten years, twenty years, or for your entire life, that's what the insurance
company will do. They'll keep the balance of the money back growing at an interest rate,
while you take a payment for your budget going forward, therefore making your money last
a lot longer. If you had the money in your own care and attention during that period
of time you might run the risk of well, blowing the money or spending it on something that
you end up with very little principle. This is a safe way to put the money in the hands
of a financial custodian for your financial future.

Keep in mind that while the annuity
money is with the insurance company, the only time you pay taxes on, is when you take your
payment out at the ordinary rate of income tax. It's a better way to make your money
last longer, using immediate annuities. I'm financial planner Patrick Munro..